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67 posts on "Household Finance"

March 07, 2016

Banking Deserts, Branch Closings, and Soft Information



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U.S. banks have shuttered nearly 5,000 branches since the financial crisis, raising concerns that more low-income and minority neighborhoods may be devolving into “banking deserts” with inadequate, or no, mainstream financial services. We investigate this issue and also ask whether such neighborhoods are particularly exposed to branch closings—a development that, according to recent research, could reduce credit access, even with other branches present, by destroying “soft” information about borrowers that influences lenders’ credit decisions. Our findings are mixed, suggesting that further study of these concerns is warranted.

Continue reading "Banking Deserts, Branch Closings, and Soft Information " »

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

February 25, 2016

Just Released: Five New Data Series on Consumer Expectations



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Today, the New York Fed is introducing a number of new data series and interactive charts reporting findings from its Survey of Consumer Expectations (SCE). Since January 2014, we have been reporting findings from this monthly survey on U.S. households’ views on inflation, commodity prices, the labor market and household finances. In addition to interactive charts showing national trends (going back to June 2013), as well as trends by demographic groups (age, income, education, numeracy and geography), we also make the underlying micro data (with a nine-month lag) available for download for research purposes.

Continue reading "Just Released: Five New Data Series on Consumer Expectations " »

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

February 24, 2016

The Graying of American Debt



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The U.S. population is aging and so are its debts. In this post, we use the New York Fed Consumer Credit Panel, which is based on Equifax credit data, to look at how debt is changing as baby boomers reach retirement age and millennials find their footing. We find that aggregate debt balances held by younger borrowers have declined modestly from 2003 to 2015, with a debt portfolio reallocation away from credit card, auto, and mortgage debt, toward student debt. Debt held by borrowers between the ages of 50 and 80, however, increased by roughly 60 percent over the same time period. This shifting of debt from younger to older borrowers is of obvious relevance to markets fueled by consumer credit. It is also relevant from a loan performance perspective as consumer debt payments are being made by older debtors than ever before.

Continue reading "The Graying of American Debt" »

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

February 22, 2016

Whither Mortgages?



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Our most recent Quarterly Report on Household Debt and Credit showed that although total household debt has increased somewhat since 2012, that growth has been driven almost entirely by nonhousing debt—credit cards, auto loans and student loans. The largest category of household debt—mortgages—has been essentially flat since 2012, in spite of a substantial rise in housing prices over that period. In this post, we explore the sources of the sluggish growth in mortgage debt using our New York Fed Consumer Credit Panel, which is based on Equifax credit data.

Continue reading "Whither Mortgages?" »

Posted by Blog Author at 7:00 AM in Household Finance, Housing | Permalink | Comments (2)

February 12, 2016

Just Released: Household Debt Grew Slowly in 2015 as Mortgage Balances Stayed Flat



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This morning, New York Fed President William Dudley spoke to the press about the growing resilience of the U.S. household sector. His speech was followed by a briefing by New York Fed economists on developments in household borrowing. Their presentation included a detailed decomposition on mortgage borrowing and payment trends, and some new research on how borrowing has evolved differently across age groups. Today, the New York Fed also released the Quarterly Report on Household Debt and Credit for the fourth quarter of 2015. The report, the press briefing , and the following analysis are all based on the New York Fed Consumer Credit Panel, which is itself based on consumer credit data from Equifax.

Continue reading "Just Released: Household Debt Grew Slowly in 2015 as Mortgage Balances Stayed Flat" »

Posted by Blog Author at 10:05 AM in Household Finance, Housing | Permalink | Comments (1)

January 06, 2016

Hedging Income Fluctuations with Foreign Currency Assets



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The world has gone through a process of financial globalization over the past decades, with countries increasing their holdings of foreign assets and liabilities. At the same time, countries have started to have a more positive foreign currency exposure by reducing their bias toward holding assets in domestic currency instead of foreign currency. One possible reason for these changes is that nations view demand shocks as more likely than supply shocks. That is, a dip in output will be accompanied by lower inflation rather than higher inflation. Monetary policy responds to demand shocks by cutting interest rates and letting the domestic currency depreciate. As a consequence, shifting the currency composition of assets and liabilities to increase net foreign currency holdings is a hedging strategy to protect the country’s income and wealth during downturns.

Continue reading "Hedging Income Fluctuations with Foreign Currency Assets" »

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

January 05, 2016

Who is Driving the Recent Decline in Consumer Inflation Expectations?



Correction: In the right panel of the chart, “Mean Probability of Deflation in the SCE,” we have corrected the labels for the group earning less than $75k, which were initially transposed. We regret the error.

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The expectations of U.S. consumers about inflation have declined to record lows over the past several months. That is the finding of two leading surveys, the Federal Reserve Bank of New York’s Survey of Consumer Expectations (SCE) and the University of Michigan’s Survey of Consumers (SoC). In this post, we examine whether this decline is broad-based or whether it is driven by specific demographic groups.

Continue reading "Who is Driving the Recent Decline in Consumer Inflation Expectations?" »

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

December 21, 2015

The Effect of Fed Funds Rate Hikes on Consumer Borrowing Costs



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The target federal funds rate has hovered around zero for nearly a decade, and observers are questioning what effect an increase could have on both the financial markets and the real economy. In this post, we examine the historical reaction of loan rates to target rate increases. Specifically, we examine the interest rates that banks offer on residential mortgages and home equity lines of credit (HELOCs).

Continue reading "The Effect of Fed Funds Rate Hikes on Consumer Borrowing Costs" »

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

November 19, 2015

Just Released: New and Improved Charts and Data on Auto Loans



Update (12.11.15): We added a link to the data used in our charts. See “Chart Data” below.

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Today, the New York Fed announced that household debt increased by a robust $212 billion in the third quarter of 2015. Both mortgage and auto loan originations increased, as auto originations reached a ten-year high and new mortgage lending appears to have finally recovered from the very low levels seen in the past year. This quarter, we’re introducing an improved estimate of auto loan originations, some new charts, and some fresh data on the auto loan market. The Quarterly Report on Household Debt and Credit and this analysis use our Consumer Credit Panel data, which is itself based on Equifax credit data.

Continue reading "Just Released: New and Improved Charts and Data on Auto Loans " »

Posted by Blog Author at 1:00 PM in Household Finance | Permalink | Comments (0)

November 16, 2015

Should Monetary Policy Respond to Financial Conditions?



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There’s an ongoing debate about whether policymakers should respond to financial conditions when setting monetary policy. An argument is often made that financial stability concerns are more appropriately dealt with by using regulatory and macroprudential tools. This post offers a theoretical justification for policymakers to monitor and possibly respond to financial conditions not because this would lessen concerns about financial stability but because this information helps reveal the state of the economy and the appropriate stance of monetary policy.

Continue reading "Should Monetary Policy Respond to Financial Conditions?" »

Posted by Blog Author at 7:00 AM in Financial Markets, Household Finance, Monetary Policy | Permalink | Comments (0)
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