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53 posts on "Household Finance"

August 31, 2015

Discounting the Long Run



LSE_2015_discounting-long-run_adrian_460_art

Expectations about the path of interest rates matter for many economic decisions. Three sources for obtaining information about such expectations are available. The first is extrapolation from historical data. The second consists of surveys of expectations. The third are expectations drawn from financial market prices, often referred to as market expectations. The last are usually considered to be model-based expectations, because, generally, a model is needed to reliably extract expectations from current prices. In this post, we explain the need for and usage of term structure models for extracting far in the future interest rate expectations from market rates, which can be used to discount the long run. We will illustrate our arguments by discussing the measurement of long-run discount rates for Social Security.


Continue reading "Discounting the Long Run" »

August 24, 2015

Rethinking Mortgage Design

John Campbell, Andreas Fuster, David Lucca, Stijn Van Nieuwerburgh, and James Vickery

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Because mortgages make up the majority of household debt in most developed countries, mortgage design has important implications for macroeconomic policy and household welfare. As one example, most U.S. mortgages have fixed interest rates—if interest rates fall, existing borrowers need to refinance to lower their interest payments. In practice, households are often slow to refinance, or may not be able to do so. As a result, the transmission of U.S. monetary policy is dampened relative to countries like the United Kingdom where mortgage rates on most loans adjust automatically with short-term interest rates. In this post, we discuss some of the key takeaways from a recent conference where policymakers, academics, practitioners, and other experts convened to discuss mortgage design and consider possible mortgage market innovations.

Continue reading "Rethinking Mortgage Design" »

Posted by Blog Author at 7:00 AM in Household Finance, Housing | Permalink | Comments (1)

August 13, 2015

Just Released: Releveraging the Consumer Credit Panel with Two New Charts



Household-credit-debt-450

Our Consumer Credit Panel, which is based on data from the Equifax credit reporting agency, first arrived at the New York Fed in 2009, and our very first Quarterly Report on Household Debt and Credit was published in August 2010, five years ago this month. We’ve continued to produce the same report, with very few changes, since the report’s initial release. However, with today’s release of the report for the second quarter of 2015, we’re beginning to make some changes, starting with two new charts that provide granularity on mortgage loan originations. These data are identical to the originations data that we’ve released previously, but we now report origination volume by credit score groups. The new charts’ form will be familiar to those who have seen our earlier work on auto loans or the U.S. Economy in a Snapshot, and will leverage some of the detail that we have in our dataset on new extensions of credit and underwriting standards.

Continue reading "Just Released: Releveraging the Consumer Credit Panel with Two New Charts" »

Posted by Blog Author at 11:15 AM in Household Finance, Housing | Permalink | Comments (0)

July 13, 2015

The Survey of Consumer Expectations Turns Two!



Survey of Consumer Expectations

The Federal Reserve Bank of New York’s Survey of Consumer Expectations (SCE) turned two years old in June. In this post, we review some of the key findings from the first two years of the survey’s history, highlighting the most noteworthy trends revealed in the data.

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Posted by Blog Author at 11:00 AM in Household Finance, Labor Economics | Permalink | Comments (0)

July 08, 2015

How Sensitive Is Housing Demand to Down Payment Requirements and Mortgage Rates?



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When a household is looking to buy a home, financial considerations are usually very important. In particular, in deciding “how much house to buy,” a household must ponder how large a down payment it can make at the time of purchase, and also how much it can afford to pay each month. The minimum required down payment and the interest rate on available mortgages (which determines the monthly payment) are key elements in the decision. When these variables change, this likely affects the price a household is willing and able to pay for a home, and thus the housing market overall. However, measuring the strength of these effects is notoriously difficult. In this post, which is based on a recent staff report, we describe a novel approach to measure these effects. We find that a change in down payment requirements tends to have a large effect on housing demand—households’ willingness to pay for a given home—especially for current renters, whereas the effects of a change in the mortgage rate are modest.


Continue reading "How Sensitive Is Housing Demand to Down Payment Requirements and Mortgage Rates? " »

Posted by Blog Author at 7:00 AM in Household Finance, Housing | Permalink | Comments (1)

May 28, 2015

Just Released: 2015 SCE Housing Survey Shows Households Optimistic about Housing Market



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The Federal Reserve Bank of New York today released results from its 2015 SCE Housing Survey. The survey, administered to 1,205 U.S. household heads in February, is a follow-up to the one conducted in February 2014. The purpose of the effort is to collect rich and high-quality information on consumers’ experiences and expectations regarding housing. The survey collects data on individuals’ perceptions and expectations of the growth in home prices, intentions regarding moving or buying a new home, and their access to credit, among other things.

Continue reading "Just Released: 2015 SCE Housing Survey Shows Households Optimistic about Housing Market" »

Posted by Blog Author at 10:15 AM in Household Finance, Housing | Permalink | Comments (0)

May 12, 2015

Just Released: Mortgage Borrowing among Most Creditworthy Abates



Household-credit-debt-450

Today’s release of the New York Fed’s Quarterly Report on Household Debt and Credit for the first quarter of 2015 reports a flattening in household debt balances. The slow growth in debt balances has left many wondering about the dynamics behind this change—who is borrowing, and who is paying down their balances? Thus, we use the same data set, the New York Fed Consumer Credit Panel (which is itself based on Equifax credit data) to identify the changes in balances by credit score, updating a post from last year with more recent data and also providing an in-depth look at the change in mortgage balances.

Continue reading "Just Released: Mortgage Borrowing among Most Creditworthy Abates " »

Posted by Blog Author at 11:15 AM in Household Finance, Housing | Permalink | Comments (0)

April 16, 2015

Just Released: Press Briefing on Student Loan Borrowing and Repayment Trends, 2015



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This morning, Jamie McAndrews, the Director of Research at the Federal Reserve Bank of New York, spoke to the press about the economic recovery, and his speech was followed by a special briefing by New York Fed economists on student loans. Here, we provide a short summary of the student loan briefing.

Continue reading "Just Released: Press Briefing on Student Loan Borrowing and Repayment Trends, 2015" »

Posted by Blog Author at 12:00 PM in Household Finance | Permalink | Comments (2)

March 27, 2015

Just Released: SCE Credit Access Survey Shows Higher Likelihood of Consumers Applying for Credit



The Federal Reserve Bank of New York today released results from its February 2015 Survey of Consumer Expectations Credit Access Survey, which provides information on consumers' experiences with and expectations about credit demand and credit access. The survey shows little change in application rates for credit over the last twelve months, but a decline in rejection rates, in particular for credit card limit increases. The expectations component of the survey shows an increase in the average likelihood of consumers applying for credit over the next twelve months for all five credit products; the increase is most pronounced for mortgage refinances and higher credit card limits.

Continue reading "Just Released: SCE Credit Access Survey Shows Higher Likelihood of Consumers Applying for Credit" »

Posted by Blog Author at 10:15 AM in Household Finance | Permalink | Comments (0)

March 05, 2015

From the Vault: Tracking Subprime Auto Loans



Recent news of banks scaling back on the issuance of car loans to borrowers with a weak credit history, coupled with recent media investigations into auto lending fraud, have drawn renewed attention to a surge in subprime auto lending. That boom is one we’ve tracked on our blog as part of an effort to shed light on ongoing change in the consumer lending market.

Continue reading "From the Vault: Tracking Subprime Auto Loans" »

Posted by Blog Author at 1:45 PM in Household Finance | Permalink | Comments (1)
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