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94 posts on "Household Finance"

November 22, 2017

Are Student Loan Defaults Cyclical? It Depends



LSE_Are Student Loan Defaults Cyclical? It Depends

This post is the second in a two-part series on student loan default behavior. In the first post, we studied how educational characteristics (school type and selectivity, graduation, and major) and family background relate to the incidence of student loan default. In this post, we investigate whether default behavior has varied across cohorts of borrowers as the labor market evolved over time. Specifically, does the ability of student loan holders to repay their loans vary with the state of the labor market? Does the type of education these students received make any difference to this relationship?

Continue reading "Are Student Loan Defaults Cyclical? It Depends" »

Posted by Blog Author at 7:00 AM in Education, Household Finance, Labor Economics | Permalink | Comments (0)

November 20, 2017

Who Is More Likely to Default on Student Loans?



Who Is More Likely to Default on Student Loans?

This post seeks to understand how educational characteristics (school type and selectivity, graduation status, major) and family background relate to the incidence of student loan default. Student indebtedness has grown substantially, increasing by 170 percent between 2006 and 2016. In addition, the fraction of students who default on those loans has grown considerably. Of students who left college in 2010 and 2011, 28 percent defaulted on their student loans within five years, compared with 19 percent of those who left school in 2005 and 2006. Since defaulting on student loans can have serious consequences for credit scores and, by extension, the ability to purchase a home and take out other loans, it’s critical to understand how college and family characteristics correspond to default rates.

Continue reading "Who Is More Likely to Default on Student Loans?" »

Posted by Blog Author at 7:00 AM in Education, Household Finance, Labor Economics | Permalink | Comments (4)

November 14, 2017

Just Released: Auto Lending Keeps Pace as Delinquencies Mount in Auto Finance Sector



LSE_Just Released: Auto Lending Keeps Pace as Delinquencies Mount in Auto Finance Sector

Total household debt increased by $116 billion to reach $12.96 trillion in the third quarter of 2017, according to the latest Quarterly Report on Household Debt and Credit released today by the New York Fed’s Center for Microeconomic Data. Household debt has been growing since mid-2013, boosted in part by steady growth in auto loan balances, which have grown for twenty-six consecutive quarters thanks to record-high levels of newly originated loans. Although new vehicle sales had begun to slump over the summer after several strong years of growth, September and October saw a rebound in sales, ending with over 18 million vehicles sold (seasonally adjusted at an annualized rate), and auto loan originations in the third quarter were commensurate with these numbers. In this post, we revisit the state of auto lending and auto loan performance, using the New York Fed Consumer Credit Panel which is based on Equifax credit data.

Continue reading "Just Released: Auto Lending Keeps Pace as Delinquencies Mount in Auto Finance Sector" »

Posted by Blog Author at 11:00 AM in Household Finance | Permalink | Comments (2)

November 08, 2017

Understanding Permanent and Temporary Income Shocks



LSE_Understanding Permanent and Temporary Income Shocks

The earnings of 200 million U.S. workers change each year for various reasons. Some of these changes are anticipated while others are more unexpected. Although many of these changes may be due to pleasant surprises—such as receiving salary raises and promotions—others involve disappointments—such as falling into unemployment. Arguably, some of these factors have rather short-lived effects on an individual’s earnings, whereas others may have permanent effects. Many labor economists have been interested in these various shocks to earnings. How big are the more permanent shocks to earnings? How large are they relative to those that are temporary in nature? What are the sources of these shocks? In this blog post, we exploit a novel data set that enables us to explore the properties of earnings shocks: their magnitudes as well as their origins.

Continue reading "Understanding Permanent and Temporary Income Shocks" »

Posted by Blog Author at 7:00 AM in Expectations, Household Finance | Permalink | Comments (0)

August 15, 2017

Just Released: More Credit Cards, Higher Limits, and . . . an Uptick in Delinquency



LSE_Just Released: More Credit Cards, Higher Limits, and . . .  an Uptick in Delinquency

Today the New York Fed’s Center for Microeconomic Data released its Quarterly Report on Household Debt and Credit for the second quarter of 2017. Overall debt balances increased in the period, continuing their moderate growth since 2013. Nearly all types of balances grew, with mortgages and auto loans rising by $64 billion and $23 billion, respectively. Credit card balances increased by $20 billion, recovering from the typical seasonal first-quarter decline. The overall balance surpassed its previous peak in the first quarter. We wrote here about how the new peak poses little concern in and of itself—after all, the debt’s composition and characteristics are now very different than in 2008. There are, however, aspects of the household balance sheet that warrant close monitoring. For example, last year, we pointed out that there had been a moderate rise in the number of credit cards issued to nonprime borrowers. Separately, last quarter we noted an uptick in delinquency transitions for credit card balances, and we observed another climb in this quarter. So here, we further investigate how credit card balances, accounts, and delinquencies have evolved over the past year.

Continue reading "Just Released: More Credit Cards, Higher Limits, and . . . an Uptick in Delinquency" »

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

May 17, 2017

Household Borrowing in Historical Perspective



HDC_2017_main-art-credit-cards_460_art

Today, the New York Fed’s Center for Microeconomic Data released its Quarterly Report on Household Debt and Credit for the first quarter of 2017. The report shows a rise in household debt balances in the quarter of $149 billion, the eleventh consecutive quarterly increase since the long period of deleveraging following the Great Recession. As of March 31, 2017, household debt balances stood at $12.73 trillion, surpassing the previous 2008 peak and hitting a level 14 percent above the trough seen in the second quarter of 2013. With this report’s release, we’re adding two new charts which show both early and severe delinquency trends by loan product type. The report and the analyses presented here are based on the New York Fed’s Consumer Credit Panel (CCP), which is sourced from Equifax credit report data.

Continue reading "Household Borrowing in Historical Perspective" »

Posted by Blog Author at 11:08 AM in Credit, Great Recession, Household Finance | Permalink | Comments (0)

May 15, 2017

Do Credit Markets Watch the Waving Flag of Bankruptcy?



Personal bankruptcy is surprisingly common in the United States. Almost 15 percent of the U.S. population has filed for bankruptcy sometime over the past twenty-five years, based on my calculations using the New York Fed Consumer Credit Panel/Equifax (CCP). In 2015, roughly 800,000 debtors filed for bankruptcy, according to court records, representing 0.64 percent of U.S. households. One of the consequences for filers is a mark on their credit report—a bankruptcy “flag”—which indicates that the consumer has filed for bankruptcy.

Continue reading "Do Credit Markets Watch the Waving Flag of Bankruptcy?" »

May 11, 2017

Just Released: 2017 SCE Housing Survey Finds Increased Optimism about Home Price Growth



LSE_Just Released: 2017 SCE Housing Survey Finds Increased Optimism about Home Price Growth

The Federal Reserve Bank of New York’s 2017 SCE Housing Survey indicates that expected home price growth over the next year has increased compared with twelve months earlier, and is at its highest level since the survey’s inception in 2014. Five-year growth expectations have also risen, albeit more modestly. In line with these findings, the majority of households continue to view housing as a good investment. Respondents expect slightly larger increases in mortgage rates than they did in last year’s survey. Renters’ perceived access to mortgage credit continued to ease.

Continue reading "Just Released: 2017 SCE Housing Survey Finds Increased Optimism about Home Price Growth" »

Posted by Blog Author at 11:00 AM in Household Finance | Permalink | Comments (2)

April 03, 2017

Diplomas to Doorsteps: Education, Student Debt, and Homeownership



LSE_Diplomas to Doorsteps: Education, Student Debt, and Homeownership

Evidence overwhelmingly shows that the average earnings premium to having a college education is high and has risen over the past several decades, in part because of a decline in real average earnings for those without a college degree. In addition to high private returns, there are substantial social returns to having a well-educated citizenry and workforce. A new development that may have important longer-term implications for education investment and for the broader economy is a significant change in the financing of higher education. State funding has declined markedly over the past two decades, a trend that has coincided with a significant increase in college tuition. To cover the rising cost of college, students and families have increased their reliance on student loans, funding a greater share of an increasing overall college cost. While the federal student loan program has undoubtedly helped mitigate the impact of higher costs on college access and enrollment, more and more students now leave college with higher amounts of debt. Given these trends, it is critical to understand whether holding student debt has affected young Americans’ later life outcomes, such as homeownership.

Continue reading "Diplomas to Doorsteps: Education, Student Debt, and Homeownership" »

Posted by Blog Author at 10:31 AM in Education, Household Finance, Labor Economics, Student Loans | Permalink | Comments (0)

At the N.Y. Fed: Press Briefing on Household Borrowing with Close-Up on Student Debt



LSE_At the N.Y. Fed: Press Briefing on Household Borrowing with Close-Up on Student Debt

An examination of recent developments in household borrowing was the focus of a press briefing held this morning at the New York Fed. President William Dudley offered opening remarks on the latest developments, then Bank economists briefed the press on their analysis of household indebtedness, placing a spotlight on student loans. Their research is based on the New York Fed Consumer Credit Panel—which is based on Equifax credit report data—as well as data from the National Student Clearinghouse. The presentation contained three components: (1) an analysis how aggregate household debt today differs from its 2008 peak, (2) new evidence on student debt growth, delinquency and repayment, and (3) an investigation of the relationship between homeownership, student debt, and educational attainment.

Continue reading "At the N.Y. Fed: Press Briefing on Household Borrowing with Close-Up on Student Debt" »

Posted by Blog Author at 10:30 AM in Credit, Education, Household Finance, Student Loans | Permalink | Comments (0)
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