Household Debt Decrease Reflects Pandemic-Related Spending Decline

first_imgHome / Daily Dose / Household Debt Decrease Reflects Pandemic-Related Spending Decline Consumer Debt COVID-19 Federal Reserve Bank 2020-08-07 Christina Hughes Babb August 7, 2020 903 Views Total household debt decreased for the first time since 2014 in Q2, including the steepest decline in credit card balances seen in the history of the data.In its Quarterly Report on Household Debt and Credit, The Federal Reserve Bank of New York’s Center for Microeconomic Data showed total household debt decreased by $34 billion (0.2%) to $14.27 trillion in second quarter of 2020. This marks the first decline since the second quarter of 2014 and is the largest decline since the second quarter of 2013.Mortgage balances—the largest component of household debt—rose by $63 billion in the second quarter to $9.78 trillion. Mortgage originations, which include mortgage refinances, reached $846 billion, the highest volume seen since the refinance boom in 2013.Reflecting the sharp decline in overall consumer spending due to the COVID-19 pandemic and related social distancing orders, credit card balances fell sharply by $76 billion in the second quarter. This was the steepest decline in card balances seen in the history of the data. In total, non-housing balances (including credit card, auto loan, student loan, and other debts) saw the largest drop in the history of this report, with an $86 billion decline.Aggregate delinquency rates dropped markedly in the second quarter, reflecting increased uptake of forbearances, which were provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Note that accounts in forbearance are typically marked as current on consumer credit reports. The share of mortgages in early delinquency that transitioned ‘to current’ rose to 61.1%, while there was a decline in the share of mortgages in early delinquency whose status worsened during Q2 2020.Protections afforded to American consumers through the CARES Act have prevented large-scale delinquency from appearing on credit reports and damaging future credit access, said Joelle Scally, Administrator of the Center for Microeconomic Data at the New York Fed.“However,” he added, “these temporary relief measures may also mask the very real financial challenges that Americans may be experiencing as a result of the COVID-19 pandemic and the subsequent economic slowdown.”The report further details housing and student debt as well as account closings, bankruptcy notations, and credit inquiries. Data Provider Black Knight to Acquire Top of Mind 2 days ago Christina Hughes Babb is a reporter for DS News and MReport. A graduate of Southern Methodist University, she has been a reporter, editor, and publisher in the Dallas area for more than 15 years. During her 10 years at Advocate Media and Dallas Magazine, she published thousands of articles covering local politics, real estate, development, crime, the arts, entertainment, and human interest, among other topics. She has won two national Mayborn School of Journalism Ten Spurs awards for nonfiction, and has penned pieces for Texas Monthly, Salon.com, Dallas Observer, Edible, and the Dallas Morning News, among others. Data Provider Black Knight to Acquire Top of Mind 2 days ago Previous: ‘Echo Wave’ of Forbearance Expirations Predicted Next: Challenges Remain When Chasing the American Dream Related Articles in Daily Dose, Featured, News Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Sign up for DS News Daily About Author: Christina Hughes Babb Demand Propels Home Prices Upward 2 days agocenter_img  Print This Post The Best Markets For Residential Property Investors 2 days ago The Week Ahead: Nearing the Forbearance Exit 2 days ago The Best Markets For Residential Property Investors 2 days ago Tagged with: Consumer Debt COVID-19 Federal Reserve Bank Servicers Navigate the Post-Pandemic World 2 days ago Household Debt Decrease Reflects Pandemic-Related Spending Decline Servicers Navigate the Post-Pandemic World 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Share Save Demand Propels Home Prices Upward 2 days ago Subscribelast_img read more