NY Fed Q2 Report: Household Debt Increased, Mortgage Originations Remain Low

From the NY Fed: Household Debt Increased Moderately in Q2 2024; Auto and Credit Card Delinquency Rates Remain Elevated

The Federal Reserve Bank of New York’s Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit. The report shows total household debt increased by $109 billion (0.6%) in Q2 2024, to $17.80 trillion. The report is based on data from the New York Fed’s nationally representative Consumer Credit Panel. It includes a one-page summary of key takeaways and their supporting data points.

The New York Fed also issued an accompanying Liberty Street Economics blog post examining growing balances of home equity lines of credit (HELOC).

“The volume of mortgage originations remained low, primarily due to subdued refinancing activity.” said Andrew Haughwout, Director of Household and Public Policy Research at the New York Fed. “Homeowners continued to increase HELOC balances as an alternative way to extract home equity.”

Mortgage balances rose by $77 billion from the previous quarter and reached $12.52 trillion at the end of June. HELOC balances increased by $4 billion, representing the ninth consecutive quarterly increase since Q1 2022, and stood at $380 billion. This is a $63 billion increase from the series low reached in Q3 2021. Credit card balances increased by $27 billion to $1.14 trillion. Auto loan balances saw a $10 billion increase and stood at $1.63 trillion. Other balances, which include retail cards and other consumer loans, were effectively flat, with a $1 billion increase.

Mortgage originations continued increasing at about the same pace seen in the previous four quarters and stood at $374 billion. Aggregate limits on credit card accounts increased modestly by $69 billion, representing a 1.4% increase from the previous quarter. Limits on HELOC increased by $3 billion, the ninth consecutive quarterly increase.

Aggregate delinquency rates were unchanged from the previous quarter, with 3.2% of outstanding debt in some stage of delinquency. Delinquency transition rates for credit cards, auto loans, and mortgages increased slightly.
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Click on graph for larger image.

Here are three graphs from the report:

The first graph shows household debt increased in Q2.  Household debt previously peaked in 2008 and bottomed in Q3 2013. Unlike following the great recession, there wasn't a decline in debt during the pandemic.

From the NY Fed:

Aggregate household debt balances increased by $109 billion in the second quarter of 2024, a 0.6% rise from 2024Q1. Balances now stand at $17.80 trillion and have increased by $3.7 trillion since the end of 2019, just before the pandemic recession.

The second graph shows the percent of debt in delinquency.

The overall delinquency rate was mostly unchanged in Q2.  From the NY Fed:

Aggregate delinquency rates were unchanged from the first quarter of 2024. As of June, 3.2% of outstanding debt was in some stage of delinquency. ... Delinquency transition rates for credit cards, auto loans, and mortgages increased slightly. Over the last year, approximately 9.1% of credit card balances and 8.0% of auto loan balances transitioned into delinquency. Early delinquency transition rates for mortgages increased by 0.1 percentage point yet remain low by historic standards.

The third graph shows Mortgage Originations by Credit Score.

From the NY Fed:

Credit quality of newly originated loans was steady, with 3.9% of mortgages and 16.7% of auto loans originated to borrowers with credit scores under 620, a slight increase from the first quarter. The median credit score for newly originated mortgages rose slightly to 772, while the median credit score of newly originated auto loans was 719, five points lower than the historic high reached in 2024Q1.

There is much more in the report.