Yuka Hayashi

speaker

247 appearances 9 recordings 1 series first heard Jul 2019 last heard Aug 2020

Yuka Hayashi’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Record Credit Card Debt Raises Alarms · 12 Feb 2020 podcast

And that is a result of people spending aggressively amid a very strong job market wage growth and rallies in the stock market.

People do use credit cards more during the holiday season, of course, so there's always an uptick in credit card debt.

But the increase that we saw last quarter seems to be larger than that.

And part of that could be explained by the shift that took place that had some issuers of store cards moving debt to credit cards from cards that were previously considered a different kind of consumer card.

So in addition to the credit card debt amount going up, what we saw during the last quarter was an increase in what they call a serious delinquency in debt.

And that's the ratio of debts that have been late by 90 days or more.

And the ratio of debt in serious delinquency aged up to 5.3%.

And that's for the general population.

But for young people ages between 18 and 29, the percentage of debt in serious delinquency went up to 9.4%.

That's quite a high number.

So after the financial crisis, financial companies tightened credit very, very sharply.

So that caused debt of all types to fall sharply.

Debt levels have been coming up in the past several years as the economy improved.

And also financial companies started loosening their lending standards a little bit.

Actually, the household debt has been expanding constantly for nearly two years, reaching a record level.

And the current level of household debt is now something like 12% higher than at the peak before the financial crisis.

What has been driving the increase

In recent months is the boom in mortgage lending.

During the last quarter, mortgage originations jumped by 42%.

42% is a huge, huge increase.

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