Student and Auto Loans Dominate Non-Mortgage Debt


Preliminary consumer credit data for November 2018 released by the Federal Reserve Board’s G.19 Consumer Credit report, which exclude loans secured by real estate, indicate an increase in outstanding credit of about 6.75% (seasonally-adjusted annual rate) from the previous month. Revolving credit increased at an annual rate of 5.50%, while nonrevolving credit increased at an annual rate of 7.00%. Revolving credit plans, which are largely composed of credit card debt but also include home equity lines of credit (HELOCs), may be unsecured or secured by collateral and allow a consumer to borrow up to a prearranged limit and repay the debt in one or more installments. Nonrevolving credit, which include auto and student loans, is closed-end credit extended to consumers that is repaid on a prearranged repayment schedule and may be secured or unsecured.

Throughout 2018 up until November, total consumer credit (seasonally adjusted) increased. The level of outstanding credit stands at about $3.98 trillion, on a seasonally-adjusted basis. The increase in the level of outstanding debt from the previous month was about $22 billion.

Since the last G19 consumer credit report, the July and August 2018 values of seasonally adjusted flows of consumer credit have each been revised downward by about $2 billion in nonrevolving credit. Nonrevolving debt was at its highest in 2015, in terms of monthly seasonally adjusted flows, and has been trending downwards since then. Revolving debt, while not on a similar downward trajectory, had been exhibiting low to negative flows in recent months (substantial reductions in revolving debt extended), a tendency that had not been seen since 2013. In October, both revolving and nonrevolving debt received substantial inflows unseen since last year. The inflows continued in November for only nonrevolving debt.

On a non-seasonally-adjusted basis, the third quarter of 2018’s amount of nonrevolving credit stood at about $2.92 trillion. It had increased from the second quarter by about $59 billion, $50 billion of which were increases in the amount of student and motor vehicle loans. Thus, not only are increases in nonrevolving credit fueled primarily by these kinds of loans, but also these types of loans still account for over 90% of nonrevolving credit. The current (Q3 2018) value of outstanding student and auto loans according to the G.19 data is $2.7 trillion, 69.1% of all outstanding non-mortgage credit as of that period.

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