Bad Credit Online Loans – Bad Credit Online Loans – Bad Credit Online Loans – Bad Credit Online Loans – Bad Credit Cards – Consumers Paid Credit Cards Again! Most of the time. But the repayment of receipts reached their highest level since the peaks of 2005/6. Which give? | Zoom Fintech | Zoom Fintech | Zoom Fintech | Zoom Fintech | Zoom Fintech

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Bad Credit Online Loans – Bad Credit Online Loans – Bad Credit Online Loans – Bad Credit Online Loans – Bad Credit Cards – Consumers Paid Credit Cards Again! Most of the time. But the repayment of receipts reached their highest level since the peaks of 2005/6. Which give? | Zoom Fintech | Zoom Fintech | Zoom Fintech | Zoom Fintech

Bad Credit Online Loans – Bad Credit Online Loans – Bad Credit Online Loans – Bad Credit Cards – Consumers Have Paid Credit Cards Again! Most of the time. But the repayment of receipts reached their highest level since the peaks of 2005/6. Which give? | Zoom Fintech | Zoom Fintech | Zoom Fintech

Bad Credit Online Loans – Bad Credit Online Loans – Bad Credit Cards – Consumers Have Paid Credit Cards Again! Most of the time. But the repayment of receipts reached their highest level since the peaks of 2005/6. Which give? | Zoom Fintech | Zoom Fintech

Bad Credit Online Loans – Bad Credit Cards – Consumers Have Paid Credit Cards Again! Most of the time. But the repayment of receipts reached their highest level since the peaks of 2005/6. Which give? | Zoom Fintech

Bad Credit Cards – Consumers Paid Credit Cards Again! Most of the time. But the repayment of receipts reached their highest level since the peaks of 2005/6. Which give?

They are not the same consumers.

By Wolf Richter for WOLF STREET.

There is no such thing as a monolithic American consumer. Everyone does their own thing. And people with credit card debt and other revolving credits such as personal loans – all high-interest debt – have paid them off in record amounts in January, perhaps using their money. stimulus to do this.

And in the opposite direction, homeowners have been extracting cash from their homes via mortgage refinancing at a time not seen in the fourth quarter since the peak of the good old days before the housing crisis in 2005 and 2006. , and at historically low mortgage rates during their term. But these two groups may not be the same people.

Reimbursement of credit cards and other revolving credits. In January, consumers paid off their credit card balances 3.6% from December and 11.9% year-over-year, unadjusted, to $ 940 billion, according to the Federal Reserve Friday afternoon. It was the largest year-over-year decline in credit card data history dating back to the 1970s and blown up by year-over-year declines during the financial crisis:

There have only been two periods in credit card history where balances have plummeted year over year, and for two very different reasons: First, during the financial crisis, when consumers did default on their credit cards; and second, during the pandemic, when the government sent hundreds of billions of dollars in waves of stimulus payments to consumers, and some of that money was used to pay off credit card debt.

January is hangover month after the holiday spending and borrowing frenzy, and credit card balances (not seasonally adjusted) tend to drop starting in December as people begin to struggle with the consequences of their frenzy. Between 2013 and 2020, the decline in credit card balances from December to January averaged 2.4%. This year in January, credit card balances fell 3.6% from December levels already the lowest since 2016.

In dollar terms, credit card balances fell $ 35 billion in January, unadjusted (red line), to $ 940 billion, after plunging $ 153 billion from the December high 2019; and seasonally adjusted (green line), they fell by $ 10 billion in January to $ 965 billion, after plunging $ 128 billion from the December 2019 peak.

The cumulative two-year drop during the financial crisis was larger than the drop in the first 10 months of the pandemic. But the next stimulus packages are being prepared in Congress, which will likely lead to further declines in the future:

In reverse order: Cash-out Refis.

Historically low mortgage lending in the fourth quarter sparked a historic mortgage boom that topped pre-housing highs. In the midst of this historic refi boom, there was an almost historic refi boom. According to a New York Fed report two weeks ago, the amount homeowners took out of their homes in the fourth quarter climbed to $ 63 billion, with borrowers taking an average of $ 27,000 out of their homes (graph via the New York Fed):

Homeowners have used the proceeds of the withdrawal to finance consumption and “investment opportunities, including home renovations,” as the New York Fed put it.

So, on the one hand, consumers are paying off expensive credit cards and other revolving credits; and on the other hand, consumers are borrowing a lot more against their homes.

It is possible that some people with re-withdrawal also have credit card debt and use the proceeds of re-withdrawal to pay off their credit card debt, using historically cheap mortgage debt to pay off expensive revolving debt. , which make a lot of sense.

But it is also possible that there is little overlap between these two groups – between those who have paid off their credit cards and those who have increased their mortgage debt through withdrawals.

In other words, it’s possible that people with credit card debt paid it off with their stimulus checks, but they might not own a home, or can’t make a repayment because that their credit score is too low, or because they don’t. have enough equity in their home, or because their mortgage is forborne and / or past due – over 17% of FHA mortgages are past due, including those that were past due before going into default abstention.

So the theory that most withdrawal refunds were used to pay off expensive credit card debt doesn’t hold water. They are different consumers. As the New York Fed pointed out, the re-pulls were primarily used to fund consumption or home improvements, like a new patio and hot tub, which were ordered out of stock due to surging demand, or speculative investments in what were then apparently booming financial markets.

Sudden rise in mortgage rates in tango with the boom in refi.

Mortgage rates hit a low in early January and have risen since. The 30-year average fixed mortgage rate, according to the Freddy Mac benchmark, fell from 2.65% in early January to 3.02% on average during the week ended Wednesday. Since then, mortgage rates have risen further, which is not yet reflected in the data:

Mortgage rates remain extremely low by historical standards, but they are a bit higher than they were two months ago – and there has now been a lot of misunderstanding in the financial markets about them, and people are clamoring for the Fed to do something to lower those mortgage rates, which has not come to pass at all.

But the more mortgage rates rise, the harder it is to make re-withdrawal work. Thus, while some consumers create a little extra space on their credit card for future consumption, other consumers will find the withdrawal to finance consumption more expensive and more difficult to do.

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Bad Credit Cards – Consumers Paid Credit Cards Again! Most of the time. But the repayment of receipts reached their highest level since the peaks of 2005/6. Which give?

Bad Credit Online Loans – Bad Credit Cards – Consumers Have Paid Credit Cards Again! Most of the time. But the repayment of receipts reached their highest level since the peaks of 2005/6. Which give? | Zoom Fintech

Bad Credit Online Loans – Bad Credit Online Loans – Bad Credit Cards – Consumers Have Paid Credit Cards Again! Most of the time. But the repayment of receipts reached their highest level since the peaks of 2005/6. Which give? | Zoom Fintech | Zoom Fintech

Bad Credit Online Loans – Bad Credit Online Loans – Bad Credit Online Loans – Bad Credit Cards – Consumers Have Paid Credit Cards Again! Most of the time. But the repayment of receipts reached their highest level since the peaks of 2005/6. Which give? | Zoom Fintech | Zoom Fintech | Zoom Fintech

Bad Credit Online Loans – Bad Credit Online Loans – Bad Credit Online Loans – Bad Credit Online Loans – Bad Credit Cards – Consumers Paid Credit Cards Again! Most of the time. But the repayment of receipts reached their highest level since the peaks of 2005/6. Which give? | Zoom Fintech | Zoom Fintech | Zoom Fintech | Zoom Fintech

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