Overall Consumer Distress Levels Improve in the New York Fed’s Region and Remain Low Compared to the Nation
The Federal Reserve Bank of New York today issued Regional Household Debt and Credit Snapshots, which examine borrowing and indebtedness trends throughout the Federal Reserve’s Second District, and are analogous to the national Quarterly Report on Household Debt and Credit.
They include data about mortgages, home equity lines, student loans, credit cards, auto loans and delinquencies for New York City and each of its boroughs, as well as metro areas throughout New York State, northern New Jersey and southwestern Connecticut. As part of today’s Snapshots series, the New York Fed issued the underlying data for this report.
The Snapshots are based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample drawn from anonymized Equifax credit data. Today’s Snapshots reflect data through December 2016.
“The state of household debt in the New York Fed’s region continues to improve and overall consumer distress levels remain low compared to the nation,” said Claire Kramer Mills, assistant vice president and community affairs officer. “Despite these positive signs, pockets of our region are experiencing notably higher delinquencies and defaults than neighboring areas. Snapshots enable us to compare the financial health of communities and pinpoint areas of stress so that we can inform efforts to support shared growth and prosperity in our region.”
Similar to past years, overall consumer distress rates in the New York Fed’s region remain well below the national rate. Consumer distress rates are the percent of consumers that were at least 90 days late on any loan type or had a third party collections balance within the last year. This rate is an indicator of difficulty managing debt and a proxy for financial stress. The consumer distress rates were 18.7% nationwide, 13.7% in New York, 15.2% in New Jersey and 14.4% in Connecticut, with improvement in all states compared to those reported in the August 2016 Snapshots series.
Two components of consumer distress are the shares of seriously delinquent mortgage and student loan borrowers at least 90 days past due. Student loan delinquency rates in the New York Fed’s region were also notably below the national rate, consistent with overall consumer distress rates. The student loan 90+ day delinquency rates were 15.6% nationwide, 12.1% in New York, 13.0% in New Jersey and 12.7% in Connecticut. These mark slight declines in delinquencies from the previous Snapshots series across each of the national, New York, New Jersey and Connecticut rates.
Overall mortgage delinquency rates are higher in New York and New Jersey, primarily due to the extended foreclosure timelines in those states. The national delinquency rate of mortgage borrowers was 1.8% – compared to 2.7% in New York, 3.1% in New Jersey and 2.3% in Connecticut. Compared to the previous Snapshots series, national and state serious delinquency rates for mortgage borrowers in New York, New Jersey and Connecticut declined between 0.7 and 1.5 percentage points.
Other Key Findings Segmented by Sub-Region:
New York State (All New York Sub-Regions except for New York City and Long Island)
- Consumer distress rates in upstate New York generally were closely aligned with the state rate of 13.7%. For example, consumer distress rates were 13.0% in the Albany-Schenectady-Troy area and 14.3% in Rochester. Meanwhile, Syracuse had the highest consumer distress rate at 16.7% in 2016.
- Average mortgage borrower balances generally increased at national, state and regional levels between 2015 and 2016. These balances in upstate New York remained significantly lower than national and state averages, which were $151,400 across New York State and $124,600 nationally. For example, the average mortgage borrower balance was $69,700 in Syracuse and $58,200 in Binghamton.
- Meanwhile, in more southern areas of New York State, the average borrower balances were typically more than the state average. For example, the average mortgage borrower balance was $202,000 in the Lower Hudson Valley.
New York City
- The overall consumer distress rate for New York City was 14.8%, or 1.1 percentage points above the New York State consumer distress rate.
- The Bronx had the highest serious delinquency rates of any other borough for mortgages, student loans, auto loans and credit cards. The overall consumer distress rates for each of the other boroughs were below the national average by at least 3.0 percentage points.
- The consumer distress rate for Long Island was 10.8%, significantly lower than the New York State rate, which is at 13.7%.
- 18% of Long Island residents have a student loan, nearly identical to the share of residents in New York State overall. At the same time, the rate of seriously delinquent student loan borrowers was 9.3%. This is 2.8 percentage points below the state rate of 12.1%.
- Meanwhile, the rate of seriously delinquent mortgage loan borrowers for Long Island was 3.5% – which was higher than the New York State rate of 2.7%. Extended foreclosure timelines in the region contribute to the high regional rate relative to the United States. Both the Long Island and New York State rates declined from the previous Snapshots series.
- Generally, borrowing and debt rates for Northeastern New Jersey, the Edison-New Brunswick Metro Division and the Newark-Union Metro Division are closely aligned.
- The average mortgage borrower balance nationally was $124,600 while the average balance for Northeastern New Jersey was $183,200 – comparable to other suburban areas like Long Island ($174,700) and the Lower Hudson Valley ($202,000).
- Newark-Union had a higher consumer distress rate than the rate for New Jersey overall – 15.9% compared to 15.2%. This difference was driven by serious delinquencies in student loans, auto loans and credit cards – which were each above the state average.
Fairfield County, Connecticut
- Although the rates of mortgage borrowers nationally and in Fairfield County are relatively similar, the mortgage borrower balance in Fairfield County was nearly double, reflecting relatively higher house prices. The average mortgage borrower balance nationally was $124,600 while the average balance for Fairfield County was $236,600.