Federal Reserve Bank of Philadelphia
01/22/2025 | Press release | Distributed by Public on 01/22/2025 07:40
Large Bank Credit Card and Mortgage Data 2024 Q3 Narrative
Card Balances and Delinquencies Continue Upward Trajectory; Mortgage Originations Stagnate
Credit card performance is showing signs of consumer stress. The share of active credit card accounts making just the minimum payment hit a 12-year high. The share of revolving card balances to total card balances is continuing its rise since the end of the pandemic. The share of delinquent balances continues to worsen year over year after surpassing pre-pandemic levels in third quarter 2023.
In response to weaker credit performance, banks are adopting more conservative lending standards.1 Tighter bank underwriting is resulting in a measurable decline in new card origination commitments and higher origination credit quality, seen in rising original credit scores. Card balances increased to a new series high, but year-over-year card growth slowed to a nearly three-year low.
First-lien mortgage origination activity remains at series lows in a high-rate environment. Banks averaged $55 billion in mortgage originations per quarter in the first three quarters of 2024 after originating $219 billion at the peak of originations in third quarter 2021. With high interest rates, consumers with low-rate mortgages have less financial incentive to refinance, dampening new mortgage demand. Existing mortgages are performing well as delinquency rates remain low.
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Card Total and Revolving Balances Reach Series Highs
Revolving and total card balances have hit series highs since the series started in 2012. Revolving card balances reached $645 billion in third quarter 2024, which represents 52.5 percent growth since a decade low of $423 billion in second quarter 2021. Total card balances have also grown, although not quite as quickly, reaching a series high of $914 billion. Consumers are not only spending more, leading to higher balances, but paying off less, increasing revolving amounts. Revolving balances as a percentage of total balances have steadily climbed since the pandemic low of 65 percent in fourth quarter 2021 to 71 percent in third quarter 2024.
Active Card Accounts Making Minimum Payments Hits Series High as Card Performance Deteriorates
The share of active credit card accounts making just the minimum payment hit a series high, 10.75 percent, in third quarter 2024. In addition, more consumers are falling behind on their monthly card payments. The balance-based 30+ days past due rate increased 33 basis points year-over-year to 3.52 percent in third quarter 2024. This represents more than double the delinquency rate of 1.57 percent at the pandemic low in second quarter 2021.
Mortgage Originations Stagnate Alongside Elevated Mortgage Rates
Mortgage originations remain at more than 12-year lows. Quarterly originations peaked at $219 billion in third quarter 2021 but were only $63 billion in third quarter 2024. With high mortgage rates, consumers who have locked in low fixed-rate mortgages have little motivation to refinance, reducing mortgage demand. Elevated mortgage rates, coupled with high home prices, are putting pressure on affordability. The median original front-end debt-to-income (DTI) ratio was 26 percent in third quarter 2024, up from 22 percent five years earlier, indicating new homebuyer budgets are more constrained as housing costs consume a larger share of income.