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A few items of note on the always interesting quarterly NY Fed Quarterly Report on Household Debt and Credit which was released today:
- Household debt jumped significantly in 2Q 2021, up $313B to $14.96T - a 2.1% rise Q/Q which was the largest since 4Q 2013 and "marked the largest nominal increase in debt balances since 2007Q2". This may not be alarming in itself, given that the asset side of households' balance sheets hit records in 1Q ($136.9T).
- The mortgage debt part of the report really stands out, though. "In the 4 quarters ending in 2021Q2, mortgage originations reached a historic high, with nearly $4.6 trillion in mortgages originated. With the robust pace of originations in the past 4 quarters, 44% of the outstanding mortgage balance is originated in the past year".
- The 2nd quarter saw $1.22T in newly originated mortgage debt. The vast majority - 71% - went to borrowers with the highest credit scores (760+).
- Taking those points in tandem with national house price rises in double digits, and there may be a continued push from some FOMC members to taper MBS earlier - or at least more quickly - than Tsys when the time comes to reduce asset purchases.
Source: NY Fed