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Delinquencies Only Saw Marginal Drift Higher In Q2

US DATA

The NY Fed’s Q2 household debt & credit report showed only a modest increase in transition rates to delinquency and serious delinquency after more marked increases in Q1, ruling out a sharper increase that could have been associated with more recessionary conditions.

  • Credit cards are the most notable, with transition to 30+ days at 9.05% (+0.1pp on the quarter) and 7.2% for 90+ days (+0.3pp).
  • These are notably above pre-pandemic levels but aggregate delinquencies remain favorable historically, with the greatest relative change in student loans after debt relief measures.
  • Aggregate for 30+ days at 3.95% in Q2 from 3.88% in Q1 vs 4.65% averaged in 2019; 90+ days at 1.59% from 1.54% in Q1 vs 2.34% average in 2019 - see chart for longer term comparisons.
  • The press release noted that homeowners continued to increase balances on HELOC as an alternative way to extract home equity. Our policy team notes researchers gave reporters additional color: Home equity lines of credit, after having declined steadily in the post-financial crisis period through 2021 began increasing in 2022 and has grown about 20% since. However, it's unclear if the trend will continue and will depend on the direction of home prices, the researchers said.
  • More broadly, overall consumer debt is overwhelmingly high quality and bankruptcies and foreclosures are low compared to historical values, meaning consumers are still in a decent place, Fed bank researchers told reporters.

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