27 posts on "Donghoon Lee"
May 14, 2024
Delinquency Is Increasingly in the Cards for Maxed‑Out Borrowers
Editor’s note: Since this post was first published, the aggregate credit card utilization rate cited in the second paragraph has been corrected. (May 14, 12:05pm). The percentage of Gen Z credit card users who are “maxed-out” has been corrected in the text and now matches the table. (May 15, 2024, 4:00 pm)
This morning, the New York Fed’s Center for Microeconomic Data released the Quarterly Report on Household Debt and Credit for the first quarter of 2024. Household debt balances grew by $184 billion over the previous quarter, slightly less than the moderate growth seen in the fourth quarter of 2023. Housing debt balances grew by $206 billion. Auto loans saw a $9 billion increase, continuing their steady growth since the second quarter of 2020, while balances on other non-housing debts fell. Credit card balances fell by $14 billion, which is typical for the first quarter. However, an increasing number of borrowers are behind on credit card payments. In this post, we explore the relationship between credit card delinquency and changes in credit card “utilization rates.”
April 17, 2024
The New York Fed Consumer Credit Panel: A Foundational CMD Data Set
As the Great Financial Crisis and associated recession were unfolding in 2009, researchers at the New York Fed joined colleagues at the Board of Governors and Philadelphia Fed to create a new kind of data set. Household liabilities, particularly mortgages, had gone from being a quiet little corner of the financial system to the center of the worst financial crisis and sharpest recession in decades. The new data set was designed to provide fresh insights into this part of the economy, especially the behavior of mortgage borrowers. In the fifteen years since that effort came to fruition, the New York Fed Consumer Credit Panel (CCP) has provided many valuable insights into household behavior and its implications for the macro economy and financial stability.
The CCP was one of the first data sets drawn from credit bureau data, one of the earliest features of the Center for Microeconomic Data (CMD), and the primary source material for some of the CMD’s most important contributions to policy and research. Here we review a few of the main household debt themes over the past fifteen years, and how our analyses contributed to their understanding.
November 30, 2023
FHA First‑Time Buyer Homeownership Sustainability: An Update
An important part of the mission of the Federal Housing Administration (FHA) is to provide affordable mortgages that both promote the transition from renting to owning and create “sustainable” homeownership. The FHA has never defined what it means by sustainability. However, we developed a scorecard in 2018 that tracks the long-term outcomes of FHA first-time buyers (FTBs) and update it again in this post. The data show that from 2011 to 2016 roughly
21.8 percent of FHA FTBs failed to sustain their homeownership.
August 8, 2023
Credit Card Markets Head Back to Normal after Pandemic Pause
Total household debt balances increased by $16 billion in the second quarter of 2023, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data. This reflects a modest rise from the first quarter. Credit card balances saw the largest increase of all debt types—$45 billion—and now stand at $1.03 trillion, surpassing $1 trillion in nominal terms for the first time in the series history. After a sharp contraction in the first year of the pandemic, credit card balances have seen seven quarters of year-over-year growth. The second quarter of 2023 saw a brisk 16.2 percent increase from the previous year, continuing this strong trend. With credit card balances at historic highs, we consider how lending and repayment have evolved using the New York Fed’s Consumer Credit Panel (CCP), which is based on anonymized Equifax credit report data.
May 15, 2023
The Great Pandemic Mortgage Refinance Boom
Total debt balances grew by $148 billion in the first quarter of 2023, a modest increase after 2022’s record growth. Mortgages, the largest form of household debt, grew by only $121 billion, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data. The increase was tempered by a sharp reduction in both purchase and refinance mortgage originations. The pandemic boom in purchase originations was driven by many factors – low mortgage rates, strong household balance sheets, and an increased demand for housing. Homeowners who refinanced in 2020 and 2021 benefitted from historically low interest rates and will be enjoying low financing costs for decades to come. These “rate refinance” borrowers have lowered their monthly mortgage payments, improving their cash flow, while other “cash-out” borrowers extracted equity from their real estate assets, making more cash available for consumption. Here, we explore the refi boom of 2020-21–who refinanced, who took out cash, and how much potential consumption support these transactions provided. In this analysis, as well as the Quarterly Report, we use our Consumer Credit Panel (CCP), which is based on anonymized credit reports from Equifax.
First‑Time Buyers Did Not Drive Strong House Price Appreciation in 2021
In May 2022, Sam Khater—chief economist for Freddie Mac—argued that a surge in first-time buyers had been an important driver of the housing market the previous year. In contrast, using data from the New York Fed Consumer Credit Panel, we find that the share of home purchases by first-time buyers fell in 2021. This suggests that other factors were important to the rapid increase in house prices in 2021.
February 16, 2023
Younger Borrowers Are Struggling with Credit Card and Auto Loan Payments
Total debt balances grew by $394 billion in the fourth quarter of 2022, the largest nominal quarterly increase in twenty years, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data. Mortgage balances, the largest form of household debt, drove the increase with a gain […]
November 15, 2022
Balances Are on the Rise—So Who Is Taking on More Credit Card Debt?
Total household debt balances continued their upward climb in the third quarter of 2022 with an increase of $351 billion, the largest nominal quarterly increase since 2007. This rise was driven by a $282 billion increase in mortgage balances, according to the latest Quarterly Report on Household Debt & Credit from 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. An increase in credit card balances was also a boost to the total debt balances, with credit card balances up $38 billion from the previous quarter. On a year-over-year basis, this marked a 15 percent increase, the largest in more than twenty years. Here, we take a closer look at the variation in credit card trends for different demographics of borrowers using our Consumer Credit Panel (CCP), which is based on credit reports from Equifax.
August 2, 2022
Historically Low Delinquency Rates Coming to an End
Total household debt increased by $312 billion during the second quarter of 2022, and balances are now more than $2 trillion higher than they were in the fourth quarter of 2019, just before the COVID-19 pandemic recession, according to the Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data. All debt types saw sizable increases, with the exception of student loans. Mortgage balances were the biggest driver of the overall increase, climbing $207 billion since the first quarter of 2022. Credit card balances saw a $46 billion increase since the previous quarter, reflecting rises in nominal consumption and an increased number of open credit card accounts. Auto loan balances rose by $33 billion. This analysis and the Quarterly Report on Household Debt and Credit use the New York Fed Consumer Credit Panel, based on credit data from Equifax.
May 12, 2022
First‑Time Buyers Were Undeterred by Rapid Home Price Appreciation in 2021
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.
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