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175 posts on "Household Finance"
May 12, 2022

First-Time Buyers Were Undeterred by Rapid Home Price Appreciation in 2021

Photo: young ethnic family looking at a home with house of sale sign and sold over it.

Tight inventories of homes for sale combined with strong demand pushed up national house prices by an eye-popping 19 percent, year over year, in January 2022. This surge in house prices created concerns that first-time buyers would increasingly be priced out of owning a home. However, using our Consumer Credit Panel, which is based on anonymized Equifax credit report data, we find that the share of purchase mortgages going to first-time buyers actually increased slightly from 2020 to 2021.

May 10, 2022

Refinance Boom Winds Down

photo: person signing papers with model house and keys on the table near them.

Total household debt balances continued their upward climb in the first quarter of 2022 with an increase of $266 billion; this rise was primarily driven by a $250 billion increase in mortgage balances, according to the latest Quarterly Report on Household Debt and Creditfrom the New York Fed’s Center for Microeconomic Data. Mortgages, historically the largest form of household debt, now comprise 71 percent of outstanding household debt balances, up from 69 percent in the fourth quarter of 2019. Driving the increase in mortgage balances has been a high volume of new mortgage originations, which we define as mortgages that newly appear on credit reports and includes both purchase and refinance mortgages. There has been $8.4 trillion in new mortgage debt originated in the last two years, as a steady upward climb in purchase mortgages was accompanied by an historically large boom in mortgage refinances. Here, we take a close look at these refinances, and how they compare to recent purchase mortgages, using our Consumer Credit Panel, which is based on anonymized credit reports from Equifax.

Posted at 11:00 am in Household Finance, Mortgages | Permalink | Comments (0)
April 21, 2022

What Might Happen When Student Loan Forbearance Ends?

Federal student loan relief was recently extended through August 31, 2022, marking the sixth extension during the pandemic. Such debt relief includes the suspension of student loan payments, a waiver of interest, and the stopping of collections activity on defaulted loans. The suspension of student loan payments was expected to help 41 million borrowers save an estimated $5 billion per month. This post is the first in a two-part series exploring the implications and distributional consequences of policies that aim to address the student debt burden. Here, we focus on the uneven consequences of student debt relief and its withdrawal. With the end-date of the student loan relief drawing near, a key question is whether and how the discontinuation of student debt relief might affect households. Moreover, will these effects vary by demographics?

March 22, 2022

Student Loan Repayment during the Pandemic Forbearance

The onset of the COVID-19 pandemic brought substantial financial uncertainty for many Americans. In response, executive and legislative actions in March and April 2020 provided unprecedented debt relief by temporarily lowering interest rates on Direct federal student loans to 0 percent and automatically placing these loans into administrative forbearance. As a result, nearly 37 million borrowers have not been required to make payments on their student loans since March 2020, resulting in an estimated $195 billion worth of waived payments through April 2022. However, 10 million borrowers with private loans or Family Federal Education Loan (FFEL) loans owned by commercial banks were not granted the same relief and continued to make payments during the pandemic. Data show that Direct federal borrowers slowed their paydown, with very few making voluntary payments on their loans. FFEL borrowers, who were not covered by the automatic forbearance, struggled with their debt payments during this time. The difficulties faced by these borrowers in managing their student loans and other debts suggest that Direct borrowers will face rising delinquencies once forbearance ends and payments resume.

February 8, 2022

Car Prices Drive Up Borrowing

Image of a row of new cars

Total household debt increased substantially during the second year of the COVID-19 pandemic, with a $1.02 trillion increase in aggregate debt balances, according to the Quarterly Report on Household Debt and Credit for the fourth quarter of 2021 from the New York Fed’s Center for Microeconomic Data. The yearly increase was the largest seen since 2007 in nominal terms and was boosted by particularly robust growth in mortgage balances, which grew by nearly $900 billion through 2021. Credit card balances, which have followed an unusual path during the pandemic, saw a large seasonal increase in the fourth quarter but remain well below pre-pandemic levels. And student loan balances increased only modestly through 2021 due to lower enrollment and also due to administrative forbearance on federal student loans—the smallest annual increase we’ve seen since 2004. Outstanding auto loan balances grew in 2021 by $84 billion. The $734 billion in newly opened auto loans through the year was the largest volume we’ve seen in our data.

Posted at 11:00 am in Household Finance, Inflation | Permalink | Comments (0)
February 2, 2022

Housing Returns in Big and Small Cities

Photo: Aerial view of Washington Square in NY

Houses are the largest asset for most households in the United States, as is the case in many other countries as well. Within countries, there is substantial regional variation in house prices—compare real estate values in Manhattan, New York City, with those in Manhattan, Kansas, for example. But what about returns on investment? Are long-run returns on real estate investment—the sum of price appreciation and rental income flows—higher in superstar cities like New York than in the rest of the country? In this blog post, we present new and potentially surprising insights from research comparing long-run returns on residential real estate in a nation’s largest cities to those experienced in the rest of the country (Amaral et al., 2021), covering the U.S. and fourteen other advanced economies over the past century.

Posted at 7:00 am in Household Finance, Housing | Permalink | Comments (0)
November 17, 2021

The Role of Educational Attainment in Household Debt and Delinquency Disparities

This post concludes a three-part series exploring the gender, racial, and educational disparities of debt outcomes of college students. In the previous two posts, we examined how debt holding and delinquency behaviors vary among students of different race and gender, breaking up our analyses by level of degree pursued by the student. We found that Black and Hispanic students were less likely than white students to take on credit card debt, auto loans, and mortgage debt, but experienced higher rates of delinquency in each of these debt areas by the age of 30. In contrast, Black students were more likely to take out student debt and both Black and Hispanic students experienced higher rates of student debt delinquency. We found that Asian students broadly followed reverse patterns from Black and Hispanic students by age 30. They were more likely than white students to acquire mortgages and less likely to hold student debt, but their delinquency patterns were in general similar to those of white students. Women were less likely to hold an auto loan or mortgage and more likely to hold student debt by age 30, and in most cases their delinquency outcomes were indistinguishable from males. In this post, we seek to understand mechanisms behind these racial and gender disparities and examine the role of educational attainment in explaining these patterns.

Unequal Distribution of Delinquencies by Gender, Race, and Education

This post is the second in a three-part series exploring racial, gender, and educational differences in household debt outcomes. In the first post, we examined how the propensity to take out household debt and loan amounts varied among students by race, gender, and education level, finding notable differences across all of these dimensions. Were these disparities in debt behavior by gender, race, and education level associated with differences in financial stress, as captured by delinquencies? This post focuses on this question.

Uneven Distribution of Household Debt by Gender, Race, and Education

Household debt has risen markedly since 2013 and amounts to more than $15 trillion dollars. While the aggregate volume of household debt has been well-documented, literature on the gender, racial and education distribution of debt is lacking, largely because of an absence of adequate data that combine debt, demographic, and education information. In a three-part series beginning with this post, we seek to bridge this gap. In this first post, we focus on differences in debt holding behavior across race and gender. Specifically, we explore gender and racial disparities in different types of household debt and delinquencies—for auto, mortgage, credit card, and student loans—while distinguishing between students pursuing associate’s (AA) and bachelor’s (BA) degrees. In the second post in this series, we investigate gender and racial disparities in delinquencies across these various kinds of consumer debt. We close with a third post where we try to understand some of the mechanisms behind differences in debt and delinquencies across gender and race.

November 9, 2021
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Liberty Street Economics features insight and analysis from New York Fed economists working at the intersection of research and policy. Launched in 2011, the blog takes its name from the Bank’s headquarters at 33 Liberty Street in Manhattan’s Financial District.

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