Consumer Credit Conditions in the Ninth District

To enhance understanding of consumer credit conditions in the Ninth Federal Reserve District and nationwide, we offer visual representations of credit quality and credit usage on the tabs below. Note: For each point in time shown, the credit quality charts for credit scores and files with a foreclosure reflect debt repayment experience over several previous years. The remaining charts reflect credit usage or delinquent debt as of the final month of each quarter.
Data source: The Federal Reserve Bank of New York/Equifax Consumer Credit Panel.

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Last updated September 25, 2014

”MFI“ in the figures below stands for median family income, which is defined in our Data Overview.

Figure 1: Percent of Consumers with Debt (All Types)

For the Ninth District (dark lines) and Nationwide (light lines)

Tradelines with balances charged off due to nonpayment within the last 7 years are included in these data, to the extent that lenders continue to report them.

Most credit files show outstanding debt of some kind. In the District, this is true for about 78 percent of files. Debt is most common in the District’s upper-income tracts, at about 84 percent of files. This presumably reflects a higher homeownership rate and greater capacity to repay debt among residents there. However, even in the District’s low-income tracts, about 64 percent of files show some kind of debt outstanding. Overall and in all tract-income categories, the percentage of files with debt is a few percentage points higher in the District than in the nation. Except in the District’s low-income tracts, the incidence of debt has trended slightly down since 2008. As shown in the figures below, bank card debt is the most widespread form, but mortgage debt accounts for the largest amounts owed.

Figure 2: Percent of Consumers with Mortgage Debt

For the Ninth District (dark lines) and Nationwide (light lines)

Tradelines with balances charged off due to nonpayment within the last 7 years are included in these data, to the extent that lenders continue to report them.

For many adults, mortgages are the largest debt owed. Overall, however, only about 32 percent of District credit files have mortgage debt outstanding. The percent of files with mortgage debt ranges from about 41 in the District’s upper-income tracts to about 14 in the District’s low-income tracts. Overall and in all tract-income groups, the prevalence of mortgage debt is a few percentage points higher in the District than in the nation and has slowly declined since 2008. In the District’s low-income tracts, the pace of decline accelerated somewhat over the past year.

Figure 3: Percent of Consumers with Bank Card Debt

For the Ninth District (dark lines) and Nationwide (light lines)

Tradelines with balances charged off due to nonpayment within the last 7 years are included in these data, to the extent that lenders continue to report them.

Balances due on bank-issued, general purpose credit cards are the most common form of debt shown in consumer credit files. As of the second quarter of 2014, about 59 percent of District files included these obligations. The figures are higher in upper-income tracts, where about 68 percent of District adults had bank card debt. However, even in low-income tracts, about 40 percent of District files showed balances owed on bank-issued credit cards. Across all categories, the prevalence of bank card debt declined in the Great Recession (i.e., from the fourth quarter of 2007 through the second quarter of 2009, according to dates determined by the National Bureau of Economic Research) and remains below pre-recession levels. The percentage of files with bank card debt is a few percentage points lower nationally, as compared to in the District.

Figure 4: Percent of Consumers with Student Debt

For the Ninth District (dark lines) and Nationwide (light lines)

Tradelines with balances charged off due to nonpayment within the last 7 years are included in these data, to the extent that lenders continue to report them.

In 2005, about 15 percent of District credit files showed outstanding student debt, although the incidence was somewhat higher in the District’s low-income tracts. Since then, the share of District files with student debt has clearly trended up and stands at about 21 percent overall and 27 percent in low-income tracts in the second quarter of 2014. However, growth in the share of District files with student debt has slowed over the past few years. Student debt is 4 percentage points more prevalent in the District than in the nation overall, and about 9 percentage points more prevalent in low-income tracts in the District than in low-income tracts nationally.

Figure 5: Percent of Consumers with Auto Debt

For the Ninth District (dark lines) and Nationwide (light lines)

Tradelines with balances charged off due to nonpayment within the last 7 years are included in these data, to the extent that lenders continue to report them.

Overall, about 29 percent of District credit files had outstanding auto loans in the second quarter of 2014, a more-than-full recovery from 2011’s post-recession low of 25 percent. The prevalence of auto debt is highest in upper-income tracts, at about 31 percent of files, and lowest in low-income tracts, at about 18 percent of files. Since 2011, the prevalence of auto debt in the District has risen from below to above the corresponding national figure, which may reflect a somewhat stronger economic recovery in the District than in the nation.

Figure 6: Median Balance of Total Debt per Borrower

For the Ninth District (dark lines) and Nationwide (light lines)

Tradelines with balances charged off due to nonpayment within the last 7 years are included in these data, to the extent that lenders continue to report them.

Total debt per District borrower trended up in 2005–2008, reaching almost $25,000 early in the Great Recession before slipping back in 2009. Apart from some brief dips, it has remained near $24,000 since then. However, these trends differ by tract income. Total debt per borrower in the District’s low-income tracts has trended up since 2008, due in part to rising student debt. Elsewhere and overall, total debt per District borrower is flat to down from 2008, including a relatively large decline in the District’s upper-income tracts that has only recently shown signs of ending. The national figures show similar trends but are a few thousand dollars lower than their District counterparts.

Figure 7: Median Balance of Mortgage Debt per Borrower

For the Ninth District (dark lines) and Nationwide (light lines)

Tradelines with balances charged off due to nonpayment within the last 7 years are included in these data, to the extent that lenders continue to report them.

Median mortgage debt per mortgagor is lower in the District than in the nation, overall and in middle- and upper-income tracts. The reverse is true in low-income tracts, and there is little difference in moderate-income tracts.

The median mortgage balance per mortgagor rose rapidly from 2005 to 2007 in all tract-income groups both nationally and in the Ninth District. After 2007, median balances generally changed less rapidly, although they continued to rise overall and in middle- and upper-income tracts. The District’s low-income tracts were an exception. By 2007, the median mortgage balance there neared the median balance that prevailed in the District’s upper-income tracts and clearly exceeded the median balance in middle-income tracts. Since 2007, the median mortgage balance in the District’s low-income tracts has fallen significantly, from a peak of $83,000 in late 2007 to the low $70,000s since 2012 (and about $72,500 as of the second quarter of 2014). It is now a bit lower than the median mortgage balance in the District’s middle-income tracts but still exceeds the median balance in the District’s moderate-income tracts. Nationally, by contrast, the median balance in low-income tracts is similar to the median balance in moderate-income tracts, and both have been clearly and consistently lower than in middle- or upper-income tracts nationally.

Figure 8: Median Balance of Bank Card Debt per Borrower

For the Ninth District (dark lines) and Nationwide (light lines)

Tradelines with balances charged off due to nonpayment within the last 7 years are included in these data, to the extent that lenders continue to report them.

Balances owed on bank-issued, general purpose credit cards are the most widespread form of debt reported in consumer credit files, but the amount owed is typically small, under $2,000 for most who use this form of credit. Median balances for bank card borrowers are higher nationally than in the District, overall and within each tract-income category.

Balances were generally increasing before the Great Recession; for example, median bank card debt per borrower in the Ninth District rose from about $1,500 in early 2005 to about $1,750 by late 2007. Balances generally stabilized during the early stages of the recession (2008) and then fell, with the overall District median briefly dropping below $1,500 in early 2011. Since then, the overall District median bank card balance has averaged about $1,600. Similar patterns can be seen in the District’s upper-, middle-, and moderate-income tracts. In the District’s low-income tracts, median balances trended down through 2012 but have leveled out near $1,300 since early 2013. Within each year, median bank card balances generally follow a seasonal pattern: they tend to rise toward the end of the year, during the holiday shopping season, and then tend to be paid down early in the year, in line with the mid-winter lull in retail sales and the availability of funds from year-end bonuses and tax refunds.

Figure 9: Median Balance of Student Debt per Borrower

For the Ninth District (dark lines) and Nationwide (light lines)

Tradelines with balances charged off due to nonpayment within the last 7 years are included in these data, to the extent that lenders continue to report them.

After trending upward from 2005 through the first quarter of 2013 at an average annual growth rate of 8.6 percent in the District and 7.1 percent nationally, the median balance owed by student debtors leveled out over the past four quarters. Overall, the median balance of District student debtors was about $7,000 in early 2005 but nearly doubled, to over $13,600, by the first quarter of 2013. Since then it has fluctuated a bit but changed little on net.

Median balances nationally were somewhat higher in the second quarter of 2014, about $14,500, but had tracked a similar growth path over time. Nationally, median student debt balances have a simple relationship to tract income: they are lowest in low-income tracts (about $12,700 as of the second quarter of 2014), higher in moderate-income tracts (about $13,400), higher yet in middle-income tracts (about $14,300) and highest in upper-income tracts (about $16,400). This is not true in the Ninth District, where the current median student loan balance in low-income tracts (about $14,900) exceeds that in moderate-income tracts (about $14,200), which in turn exceeds that in middle-income tracts (about $13,300). However, as in the nation, the District’s highest median student loan balances (about $15,300) are in upper-income tracts.

Figure 10: Median Balance of Auto Loan per Borrower

For the Ninth District (dark lines) and Nationwide (light lines)

Tradelines with balances charged off due to nonpayment within the last 7 years are included in these data, to the extent that lenders continue to report them.

Overall, the District’s median balance per auto loan borrower was fairly stable, at just under $7,500, before and in the early stages of the Great Recession. From late 2008 it declined, bottoming out at just over $6,800 in early 2010. Since then, median District auto debt has rebounded to about $8,500 overall in the second quarter of 2014 and now also exceeds its pre-recession peak in all tract-income groups. Except briefly in early 2010, median auto debt correlates in an obvious way with tract income: higher income is associated with higher debt. Throughout the period shown, median auto debt per borrower has been about $1,000–$1,500 higher in the nation than in the Ninth District.

Data Overview

For more information about the data and methodologies used here and additional resources related to consumer credit data, see our Data Overview


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Please e-mail them to mpls.communitydevelopment@mpls.frb.org.

 
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