Total Household Debt Climbs To Over $15 Trillion In Q3 2021, Driven By New Extensions Of Credit

NEW YORK – The Federal Reserve Bank of New York’s Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit. The Report shows that total household debt increased by $286 billion (1.9%) to $15.24 trillion in the third quarter of 2021. The total debt balance is now $1.1 trillion higher than at the end of 2019. It is also $890 billion higher than in Q3 2020, and $2.57 trillion higher, in nominal terms, than the $12.68 trillion peak seen in 2008. The Report is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative random sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data.Mortgage balances-the largest component of household debt-rose by $230 billion and stood at $10.67 trillion at the end of September. Credit card balances increased by $17 billion, the same size increase as in the second quarter. Despite the increase, credit card balances remain $123 billion lower than they had been at the end of 2019. Auto loan balances increased by $28 billion in the third quarter. Student loan balances grew by $14 billion, coinciding with the academic borrowing year. In total, non-housing balances grew by $61 billion, with gains across all debt types.

New extensions of installment credit remained near series highs for both mortgages and auto loans. Mortgage originations, which include mortgage refinances, stood at $1.1 trillion, declining slightly from the series high of $1.2 trillion reached in the second quarter of 2021. The volume of newly originated auto loans, which includes leases, was $199 billion, declining slightly from the second quarter’s series high of $202 billion. Aggregate limits on credit card accounts now stand at $3.96 trillion, increasing by $88 billion in the third quarter and reversing the decline seen in the first three quarters of the pandemic recession.

“We are again seeing credit card balances increase in the third quarter after a solid rise in the previous,” said Donghoon Lee, research officer at the New York Fed. “As pandemic relief efforts wind down, we are beginning to see the reversal of some of the credit card balance trends seen during the pandemic, namely reduced consumption and the paying down of balances. At the same time, as pandemic restrictions are lifted and consumption normalizes, credit card usage and balances are resuming their pre-pandemic trends, although from lower levels.”

Aggregate delinquency rates across all debt products have remained low and continued to decline since the beginning of the pandemic, attributable to a large degree to CARES Act support and lender concessions. The share of mortgages that transitioned to delinquency increased slightly to 0.41% from the second quarter’s record low, as the option to enter forbearance is no longer widely available. As of late September, 2.7% of outstanding debt was in some stage of delinquency, a 2.0 percentage point decrease from the fourth quarter of 2019, just before the COVID-19 pandemic hit the United States.

The New York Fed also issued an accompanying Liberty Street Economicsblog post that further examines credit card trends, including credit scores and balances. The blog takes a detailed look at increases in credit issuance and limits, and at which borrowers are being approved for credit in recent months, amid recovering consumption.

The Report includes a one-page summary of key takeaways and their supporting data points. Overarching trends from the Report’s summary include:

Housing Debt

• There was $1.11 trillion in newly originated mortgage debt in Q3 2021, with 69% of it originated to borrowers with credit scores over 760. Two percent of newly originated mortgages were originated to subprime borrowers, a sharp contrast to the 12% average seen between 2003-2007.
• New foreclosures remain very low between July 1 and September 30. Although the hold on foreclosures due to CARES was lifted on July 31st, additional available relief at the federal and local levels will forestall many foreclosure starts until 2022.
• The share of mortgage balances 90+ days past due remained at 0.5%.

Student Loans

• Outstanding student loan debt stood at $1.58 trillion in the third quarter, a $14 billion rise from 2021Q2.
• About 5.3% of aggregate student debt was 90+ days delinquent or in default in Q3 2021. The lower level of student debt delinquency reflects a Department of Education decision to report current status on loans eligible for CARES Act forbearances.

Account Closings, Credit Inquiries and Collection Accounts

• The number of credit inquiries within the past six months – an indicator of consumer credit demand -was at 122 million, a 1.3% increase from the previous quarter. The increases in the 2nd and 3rd quarters of 2021 came on the heels of six quarters of declining inquiries.
• 217 million new accounts were opened in the third quarter, a return to the level seen in 2020Q1.

Household Debt and Credit Developments as of Q3 2021

Category	Quarterly Change * (Billions $)	Annual Change** (Billions $)	Total As Of Q3 2021 (Trillions $)
Mortgage Debt	(+) $230	(+) $811	$10.67
Home Equity Line Of Credit	(-) $5	(-) $45	$0.32
Student Debt	(+) $14	(+) $38	$1.58
Auto Debt	(+) $28	(+) $83	$1.44
Credit Card Debt	(+) $17	(-) $3	$0.80
Other	(+) $2	(+) $6	$0.42
Total Debt	(+) $286	(+) $890	$15.24

*Change from Q2 2021 to Q3 2021
** Change from Q3 2020 to Q3 2021

Flow into Serious Delinquency (90 days or more delinquent)

Category	Q3 2020	Q3 2021
Mortgage Debt	1.0%	0.3%
Home Equity Line Of Credit	0.7%	0.3%
Student Loan Debt	4.4%	1.1%
Auto Loan Debt	2.1%	1.6%
Credit Card Debt	4.7%	3.2%
Other	4.1%	2.8%
ALL	1.7%	0.7%

About the Report

The Federal Reserve Bank of New York’s Household Debt and Credit Report provides unique data and insight into the credit conditions and activity of U.S. consumers. Based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample drawn from anonymized Equifax credit data, the report provides a quarterly snapshot of household trends in borrowing and indebtedness, including data about mortgages, student loans, credit cards, auto loans and delinquencies. The report aims 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. Sections of the report are presented as interactive graphs on the New York Fed’s Household Debt and Credit Report web page and the full report is available for download.