Tuesday, February 15, 2011

NY Fed: Delinquent Loans Fall Back to 2007 Levels



The NY Federal Reserve recently released it "Quarterly Report on Household Debt and Credit," and here are some key points:

1. Aggregate consumer debt continued to decline in the fourth quarter, continuing its trend of the previous two years. As of December 31, 2010, total consumer indebtedness was $11.4 trillion, a reduction of $1.08 trillion (8.6%) from its peak level at the close of 2008Q3, and $155 billion (1.3%) below its September 30, 2010 level.  This was the lowest level of consumer debt in almost four years, since the first quarter of 2007 when household debt totaled $11.34 trillion. 

2. New delinquent loan balances dropped to $271 billion in the fourth quarter of 2010, the lowest level since the second quarter of 2007, three and-a-half years ago (see chart). 

3. New delinquent mortgage loan balances fell to $202.4 billion in the fourth quarter of 2010, the lowest level since $202 billion in the third quarter of 2007 (see chart). 

HT: Junkyard Hawg

5 Comments:

At 2/15/2011 8:12 PM, Blogger Che is dead said...

Let's see if someone can explain the real problem as succinctly as possible

 
At 2/15/2011 9:33 PM, Blogger aorod said...

I wish the Federal budget would fall back to 2007 levels.

 
At 2/16/2011 5:36 AM, OpenID murosgroup said...

"I wish the Federal budget would fall back to 2007 levels."
in 10 years ;)

 
At 2/16/2011 7:01 AM, Blogger geoih said...

This is probably only a sign that things aren't getting worse, not that they are getting better.

All those people displaced by the recession are still out there displaced. Those who weren't displaced are managing to keep their heads above water (for now).

 
At 2/16/2011 5:25 PM, Blogger Dr. T said...

"Aggregate consumer debt continued to decline..."

How much of the decline in debt was due to repayment of loans and mortgages and how much was due to bankruptcies and foreclosures? Without that breakdown, we have no idea if the decline in debt is good news or bad. Part of the answer is within the report itself:

"New bankruptcies noted on credit reports fell 4.1% during the quarter, from 522,000 to 500,000. However, new bankruptcies in 2010Q4 were still 2.7% above their levels of 2009Q4."

"About 2.4% of current mortgage balances transitioned into delinquency during 2010Q4, reversing the deterioration in this figure that we observed in the third quarter."

The report does not give the dollar values of the bankruptcies or foreclosures, so I could not calculate how much of the debt decline was from loan defaults. Mortgage delinquincies increased, so I suspect that much of the decline was from eliminating bad debt and not from on-time or early repayment of debt.

 

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