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Regional Matters

August 26, 2019

Closer Look: Household Debt and Delinquencies in the Fifth District

Household debt is on the rise across the United States, according to data from the Federal Reserve Bank of New York. The data are based on a sample of credit files compiled by the credit monitoring company Equifax and show estimates of auto, credit card, mortgage, and student loan debt per capita and delinquency rates. In the August edition of Snapshot, loan delinquencies were discussed in "Closer Looks." For this article, we focus on trends in debt shares and in delinquency rates for auto loans, credit cards, and mortgages in the Fifth District.

National Household Debt

As of the first quarter of 2019, aggregate household debt is now 7.8 percent higher than the previous peak during the third quarter of 2008. Borrowers owed $13.67 trillion during the first quarter of 2019. Non-housing-related debt increased by $10 billion between the fourth quarter of 2018 and the first quarter of 2018. Nationally, this increase was primarily driven by an increase in student loan debt and a modest increase in auto loan debt.

In addition to household debt increasing, loan delinquencies for particular types of debt have recently increased. A total of $623 billion in debt was delinquent as of the first quarter of 2019, including $417 billion in payments that were at least 90 days late. Since 2012, the share of auto loan balances that are severely delinquent has increased, and since 2017, a larger share of credit card balances have become severely delinquent. On the national level, certain types of household debt and loan delinquencies are on the rise.

Household Debt in the Fifth District

The Federal Reserve Bank of New York also produces state-level household debt statistics as part of their Consumer Credit Panel. State-level data are reported at the end of the fourth quarter annually (the most recent data are from the fourth quarter of 2018).

The composition of non-housing-related household debt in the Fifth District has changed notably since 2003. In 2003, student loans accounted for 14 percent of the debt per capita of the three major non-housing loan categories. By 2018, student loans accounted for 42 percent of the non-housing debt per capita in the Fifth District. Credit cards fell from 42 percent of per capita household debt to 24 percent between 2003 and 2018. (See chart below.)

Mortgages make up the majority of debt across the United States and in the Fifth District. However, the share of mortgage debt in the latter region decreased to 73 percent from a high of 81 percent in 2008. Credit card debt makes up a smaller share than it did in 2003, while student loan debt grew from 3 percent to 11 percent during that period. The chart below includes mortgages in the calculations of the share of household debt.

Rising Auto Loan Delinquencies

Auto loan delinquencies are on the rise in the Fifth District. The graph below shows that auto loan delinquency rates have more than doubled in the District of Columbia, Maryland, North Carolina, and West Virginia. Across the United States, the auto loan delinquency rate increased from 2 percent in 2003 to 4 percent in 2018. For many states, the auto loan delinquency rate now exceeds figures seen during the Great Recession. For additional information on loan delinquencies in the Fifth District, refer to the August edition of Snapshot.

Implications of Household Debt for Homeownership

Changes in the amount of debt incurred by borrowers, and their ability to repay, has implications for homeownership. Recent research by the Federal Reserve Board of Governors found that a $1,000 increase in student loan debt leads to a 1 to 2 percentage point decline in the homeownership rate for borrowers. Additionally, they estimate that about 20 percent of the decline in homeownership among young adults can be attributed to increased student loan debts.

Overall, the amount of household debt is increasing across the United States as well as in the Fifth District. The composition of household debt is also changing, with student loan debt making up a noticeably larger share of household debt than it did a decade ago.


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Views expressed are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Federal Reserve System.

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