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New York Fed Reports that Mortgage Balances Place Hold on Debt

debtsThe Federal Reserve Bank of New York (New York Fed) released their Household Debt and Credit Report this week that showed household debt balances including, mortgages, credit cards, auto loans, and student loans were “largely flat for Q1 2015.”

The report provides information about the state of the credit condition and activity of U.S. consumers and is intended to help community groups, small businesses, state and local governments, and the public to better understand, monitor, and respond to trends in borrowing and indebtedness at the household level. Data for the report is extracted from the New York Fed’s Consumer Credit Panel, a nationally representative sample taken from anonymized Equifax credit data.

According to the data, household debt minimally increased from the beginning of Q1 2015 to the end of March with a 0.2 percent ($24 billion) rise or an increase of $11.85 trillion.

The New York Fed attributed the marginal growth to the rise in mortgage balances, which represents the bulk of household debt, the report says. Mortgage balances took up an $8.17 trillion portion of the debt for Q1. Furthermore, a balance of $510 billion on home equity lines of credit (HELOC) at the end of Q4 2014 remained unchanged for Q1 2015.  Household debt remains 6.5 percent below its peak of $12.68 trillion in Q3 2008.

New mortgage loans, including refinanced mortgages, totaled $369 billion last quarter. This was a small improvement from last quarter but still historically low, according to the New York Fed. On the other hand, mortgage delinquencies experienced an improvement of just 112,000 individuals that had a new foreclosure notation added to their credit reports in the first quarter, the lowest amount in the New York Fed’s data history.

“Tight standards on mortgage lending are reflected in both sluggish growth in housing debt as well as substantial reductions in mortgage delinquency and defaults,” said Andrew Haughwout, SVP and economist at the New York Fed.

All other non-housing debt balances experienced a 0.7 percent increase from last quarter. This is mostly due to a $32 billion increase in student loans and a $13 billion increase for auto loans. These increases’ were partially offset by a $16 billion decline in credit card balances.

About Author: Xhevrije West

Xhevrije West is a writer and editor based in Dallas, Texas. She has worked for a number of publications including The Syracuse New Times, Dallas Flow Magazine, and Bellwethr Magazine. She completed her Bachelors at Alcorn State University and went on to complete her Masters at Syracuse University.
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