Delinquency Rates
I was just poking around FRED as I do when I can’t sleep and I discovered something which amazed me (I am often amazed by my ignorance). Non mortgage delinguency rates are low. In fact the delinquency rate on credit card loans of all commercial banks is the lowest on record (records only go back to 1991)
The blue curve shows delinquency rates on credit card loans by commercial banks. The red line shows the even lower (but not quite lowest ever) delinquency rate on business loans. If I put delinquency rates for single family home mortgages or all real estate secured loans, the graph would be hard to read as they dwarf the rates I graphed (and are at record highs).
Similarly the volume of total consumer loans of all commercial banks (“Total Consumer Credit Outstanding (TOTALSL), Monthly, End of Period, Seasonally Adjusted” again in blue) and of commercial and industrial loans ( “Commercial And Industrial Loans, All Commercial Banks (ACILACB), Quarterly, Not Seasonally Adjusted”, again in red) has recovered sharply after the recession.
The decline in commercial and industrial loans was only 1.5 times that of the 2001 recession, the series turned back up sooner and has been increasing more rapidly. There is no correction for inflation, these graphs are in millions of dollars (the legend is especially pointless because for some reason consumer loans are given in billions by default and I had to change the scale by hand).
The remaining financial market problem seems to me to be extremely concentrated in financing real estate transactions especially housing.
via the NY Fed quarterly report:
These data show that student loan debt has substantially increased since 2003, growing $663 billion. Outstanding student loan debt surpassed credit card debt as the second highest form of consumer debt in the second quarter of 2010.
“Student loan debt continues to grow even as consumers reduce mortgage debt and credit card balances,” said Donghoon Lee, senior economist at the New York Fed. “It remains the only form of consumer debt to substantially increase since the peak of household debt in late 2008.”
Additionally, 90+ day delinquency rates for student loans steadily increased from 6.13 percent in the first quarter of 2003 to its current level of 8.69 percent. They remain higher than that of mortgages, auto loans and home equity lines of credit (HELOC).2 90+ day student loan delinquencies were at their peak during the third quarter of 2010 at 9.17 percent and are the only form of those delinquencies to increase this quarter (by 0.24 percent).
here’s what i had in my summary from last week:
the other important housing report issued this week was the LPS Mortgage Monitor for April, which gives us some insight into the condition of household finances by tracking the number of homeowners who are not paying on their mortgage loans; their snapshot of month end data showed that mortgage delinquencies had increased for the first time in nine months, while the number of homeowners in the foreclosure process was relatively unchanged; a total of 2,048,000 US home mortgages were in foreclosure, ie, proceedings had started but the homes had not yet been seized; this represents 4.14% of all mortgages outstanding as was essentially unchanged from the numbers of a year ago; homeowners had missed at least one payments on another 3,522,000 homes; or 7.12% of home with mortgages; of those, 1,595,000 had not made a housepayment in over 90 days (and had not yet been foreclosed); this gives a total of 5,570,000, or more than one in nine homeowners who were not making payments on their homes at the end of april…as noted, this was an increase of 0.3% in the total number of homeowners delinquent from the march levels…a major highlight of this report was a 73% increase in FHA foreclosure starts, driven by mortgages originating in 2008 and 2009…when home sales collapsed in 2008, FHA stepped in to fill the financing gap left by the bank pullback; & of course, with prices continuing to collapse since, most of those FHA-financed homeowners are now underwater; the adjacent chart, from page 8 of the LPS pdf, shows that FHA foreclosure spike, while new private & portfolio foreclosures, & foreclosures by the GSEs (Fannie & Freddie) have continued to decline…
separately, the GSEs also reported their delinquency rates for april this week; Fannie Mae reported that their single family serious delinquency rate declined in April to 3.63%, down from 3.67% in March; wherein serious delinquencies are those where the homeowner has missed 3 payments; that rate is down from 4.19% in April last […]
Thank you for the information. I notice that in my post, I overlooked student debt (paid mine off more years ago than I like to remember). I haven’t uh exactly clicked the links, but I hope someone does.