NEW YORK – The Federal Reserve Bank of New York's Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit, which shows that total household debt increased by $87 billion (0.6%) to $14.35 trillion in the third quarter of 2020. The increase more than offset the decline seen in the second quarter of 2020 as total household debt has surpassed its 2020Q1 reading. The Report is based on data from the New York Fed's Consumer Credit Panel, a nationally representative sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data. This latest report reflects consumer credit data as of September 30, 2020.
Mortgage balances—the largest component of household debt—rose by $85 billion in the third quarter, and sat at $9.86 trillion on September 30. Mortgage originations, which include refinances, were at $1.05 trillion, the second highest volume in the history of the series and second only to the historic refinance boom in 2003Q3. Balances on home equity lines of credit saw a $13 billion decline, their 15th consecutive decrease since 2016Q4, bringing the outstanding balance to $362 billion.
Credit card balances fell slightly in the third quarter by $10 billion, following the $76 billion decline in 2020Q2, the steepest decline in card balances in the history of the data (since 1999). The decline in card balances reflects continued weak consumer spending amidst the COVID-19 pandemic, as well as households paying down existing credit card debt.
Auto and student loan balances both increased slightly in the third quarter, by $17 billion and $9 billion, respectively. Auto loan originations, which includes both loans and leases, reached a series high in Q3. In total, non-housing balances (including credit card, auto loan, student loan, and other debts) saw a $15 billion increase.
Aggregate delinquency rates across all debt products fell again in the third quarter, indicating the ongoing effect of forbearances provided by the CARES Act or voluntarily offered by lenders. New transitions into early delinquency have also fallen across product type. The various forbearance offerings and uptake have largely protected borrowers' credit files from being marked delinquent from missed payments. As of September 30, 3.4% of outstanding debt was in some stage of delinquency, a 0.2 percentage point decrease from the second quarter, and 1.4 percentage points lower than the rate observed in 2019Q4. About 132,000 consumers had a bankruptcy notation added to their credit reports in 2020Q3, a decline from the previous quarter and a new historical low.
The number of federal student loans and federally-backed mortgages transitioning into delinquency both continued to fall as they remained covered by CARES Act forbearances. Auto loans and credit cards also showed continued declines in delinquency transition rates, reflecting the impact of government stimulus programs and bank-offered forbearance options for distressed borrowers.
"Mortgage originations, including refinances, continued on their upward trend as homeowners continue to take advantage of the low interest rate environment." said Donghoon Lee, research officer at the New York Fed. "Notably, balances and delinquency rates across debt products remained largely stable in the third quarter. The data likely reflects improvements in economic activity and the labor market, as well as the positive impacts of temporary relief measures provided through CARES Act provisions or offered voluntarily by lenders."
The New York Fed also issued an accompanying Liberty Street Economics post that examined borrower participation in forbearance agreements and the impact of uptake across debt products.
The Report includes a one-page summary of key takeaways and their supporting data points. Overarching trends from the Report's summary include:
Housing Debt
- There was $1.05 trillion in newly originated mortgage debt in 2020Q3.
- About 0.6% of current mortgage balances became delinquent in 2020Q3 as many borrowers enrolled in forbearance programs.
- About 16,000 individuals had a new foreclosure notation added to their credit reports between July 1 and September 30, marking the lowest number since the beginning of the series in 1999.
Student Loans
- Outstanding student loan debt stood at $1.55 trillion in the third quarter a $9 billion increase from the second quarter.
- About 6.5% of aggregate student debt was 90+ days delinquent or in default in 2020Q3. The lower level of student debt delinquency reflects a Department of Education decision to report current status on loans eligible for CARES Act forbearances.
Account Closings, Credit Inquiries and Collection Accounts
- The number of credit inquiries within the past six months – an indicator of consumer credit demand – was at 122 million, a small decline from the previous quarter.
- Account openings declined by 8 million accounts to 195 million following a larger drop in the second quarter.
Household Debt and Credit Developments as of Q3 2020
| Category | Quarterly Change * (Billions $) | Annual Change** (Billions $) | Total As Of Q3 2020 (Trillions $) |
| Mortgage Debt | (+) $85 | (+) $424 | $9.86 |
| Home Equity Line Of Credit (HELOC) | (-) $13 | (-) $34 | $0.36 |
| Student Debt | (+) $9 | (+) $48 | $1.55 |
| Auto Debt | (+) $17 | (+) $45 | $1.36 |
| Credit Card Debt | (-) $10 | (-) $74 | $0.81 |
| Other | (-) $1 | (-) $8 | $0.42 |
| Total Debt | (+) $87 | (+) $401 | $14.35 |
*Change from Q2 2020 to Q3 2020
** Change from Q3 2019 to Q3 2020
Flow into Serious Delinquency (90 days or more delinquent) 1
| Category | Q3 2019 | Q3 2020 |
| Mortgage Debt | 0.99% | 0.96% |
| Home Equity Line Of Credit | 0.83% | 0.69% |
| Student Loan Debt | 9.26% | 4.36% |
| Auto Loan Debt | 2.34% | 2.09% |
| Credit Card Debt | 5.16% | 4.73% |
| Other | 4.67% | 4.14% |
| ALL | 2.27% | 1.70% |
About the Report
The Federal Reserve Bank of New York's Household Debt and Credit Report provides unique data and insight into the credit conditions and activity of U.S. consumers. Based on data from the New York Fed's Consumer Credit Panel, a nationally representative sample drawn from anonymized Equifax credit data, the report provides a quarterly snapshot of household trends in borrowing and indebtedness, including data about mortgages, student loans, credit cards, auto loans and delinquencies. The report aims to help community groups, small businesses, state and local governments and the public to better understand, monitor and respond to trends in borrowing and indebtedness at the household level. Sections of the report are presented as interactive graphs on the New York Fed's Household Debt and Credit Report web page and the full report is available for download.
