Household Debt Increased Ahead of Coronavirus Outbreak

Outstanding household debt increased by 1.1% in the first quarter of 2020, rising by $155 billion to land at $14.3 trillion, the Federal Reserve Bank of New York reported today. This increase marks the 23rd consecutive quarter of debt growth. The New York Fed noted, however, that the “data do not fully reflect the potential effects of COVID-19 that materialized in the second half of March 2020.”

Mortgage balances, the largest component of household debt, rose by $156 billion in the first quarter, landing at $9.71 trillion. Home equity lines of credit fell $4 billion. The median credit score for new borrowers rose for both mortgages and auto loans in the first quarter as credit standards tightened. Meanwhile, credit card balances declined by $34 billion, a common pattern during the first quarter, while auto loans rose by $15 billion and student loans rose by $27 billion.

Overall delinquency rates were mostly unchanged during the first quarter, with 4.6% of all outstanding debt in some stage of delinquency. Mortgage delinquencies edged up slightly, with 1.17% of balances 90 days or more delinquent. For auto loans and credit card debt, the flow into serious delinquency held relatively steady, landing at 2.37% for auto loans and 5.31% for credit card debt. Student loan delinquency transition rates continued to remain high relative to other types of debt.