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Household Debt and Credit
Household Debt and Credit
The views presented here are those of the author and do not necessarily reflect those of the Federal Reserve Bank of New York, or the Federal Reserve System
5% 12%
17%
33%
Non-mortgage balances
Billions of Dollars 1000 HELOC 900 800 700 600 500 400 300 200 100 0 Source: FRBNY Consumer Credit Panel / Equifax Billions of Dollars 1000 Auto Loan Student Loan Credit Card 900 800 700 600 500 400 300 200 100 0
Student debt is the only kind of household debt that continued to rise through the Great Recession and has now the second largest balance after mortgage debt.
9.0%
Balance
17.7%
39.9%
29.8%
40% of borrowers have balances less than $10,000 3.7% of borrowers have balances greater than $100,000
Source: FRBNY Consumer Credit Panel / Equifax
6
20
30
15
20
10 10 5
Each increased by 70% between 2004 and 2012 (7% per year)
Source: FRBNY Consumer Credit Panel / Equifax
7
10
6.7 million borrowers, or 17%, are 90+ days delinquent. 30-49 year olds have higher delinquency rates.
11
About 44% of borrowers are not yet in repayment due to deferments and forbearances.
12
all ages
9% 8% 7% 6% 5% 4% 3% 2% 1% 0%
15
16
2005 Student Debt Debt Balance 2005 Student Balance Source: FRBNY Consumer Credit Panel / Equifax
Share borrowers age 25-30 years old with new mortgage originations
no student debt with current 100K+ student debt
18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 2005:Q4 2006:Q4 2007:Q4 2008:Q4 2009:Q4 2010:Q4 2011:Q4 2012:Q4
With delinquent student debt, mortgage origination is very difficult. The mortgage origination gap across the size of student debt has declined between 2005 and 2012.
Note: delinquency is as of Q4 of previous year
18
Delinquent student loan borrowers are very likely to be delinquent on other debt as well.
Source: FRBNY Consumer Credit Panel / Equifax
19
20
Conclusion
Higher education is an important investment among young workers for better jobs and higher income, but it is accompanied with a growing student debt burden. Total student loan balances almost tripled between 2004 and 2012 due to increasing numbers of borrowers and higher balances per person. Nearly one third of the borrowers in repayment are delinquent on student debt. The higher burden of student loans and higher delinquencies may affect borrowers access to other types of credit and the performance of other debt.
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Reference Charts
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1.1% 1.3% 3.2% 0.4% 0.2% 2.2% 2.5% 6.5% 11.5% 1-10K 10K-25K 25K-50K 50K-75K 55.5% 26.8% 75K-100K 100K-150K 150K-200K 200K+ 29.8% 17.7% 39.9% 1-10K 10K-25K 25K-50K 50K-75K 75K-100K 100K-150K 150K-200K 200K+ 0.9% 0.6%
24
Source: FRBNY Consumer Credit Panel / Equifax