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Credit Card and Auto Loan Rates Drop for the First Time in Years

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Total outstanding US consumer debt stood at $5.08 trillion for the first quarter of 2024, increasing at an annualized rate of 2.46% (seasonally adjusted), according to the Federal Reserve’s G.19 Consumer Credit Report. From the second quarter of 2023 to the second quarter of 2024, the total increased by 1.84%. This year-over-year (YoY) growth rate is the lowest observed since the first quarter of 2021.

Nonrevolving and Revolving Debt

Of the total outstanding US debt in the first quarter of 2024, the nonrevolving share is 74%, with revolving at 26%. Nonrevolving debt (primarily student and auto loans) stands at $3.73 trillion (SA) for the second quarter of 2024. Revolving debt (mainly credit card debt) stands at $1.34 trillion.

The pace of growth has slowed for both nonrevolving and revolving debt as households’ pandemic-era savings have dwindled. In terms of YoY growth, both nonrevolving and revolving debt peaked in the fourth quarter of 2022 at 15.10% and 5.34% respectively. In the second quarter of 2024, the YoY growth rate for nonrevolving debt decreased to 6.12%, from 7.99% in the first quarter, while the growth rate for revolving debt increased from 0.14% to 0.39%. This was the sixth consecutive quarterly decline in YoY growth for nonrevolving debt while revolving debt saw its first uptick in the YoY rate in five quarters.

Student and Auto Loans

Breaking down the components of nonrevolving debt, student loans account for 47%, and auto loans make up 42% (the G.19 report excludes real estate loans). Collectively, the other loans make up the remaining 11% of nonrevolving debt.

Student loans in the second quarter of 2024 totaled $1.74 trillion (non-seasonally adjusted), marking the fourth consecutive decrease in the YoY rate at -0.96%, following an annual decrease of -1.22% in the previous quarter. The third quarter of 2023 marked the first YoY decrease for student loan debt since the data was first reported.

Auto loan debt for the second quarter of 2024 was $1.57 trillion (NSA). Auto loan YoY growth has steadily decelerated over the past six quarters. The fourth quarter of 2021 saw a high of 13.74% YoY growth compared to the second quarter of 2024 YoY growth rate of 1.95%. This slowdown partially reflects the relatively high interest rate on auto loans, which have increased from 4.52% in Q1 2022 to 8.20% in Q2 2024 (60-month new car loans). However, this car loan rate experienced its first (albeit slight) decline in over two years, falling from 8.22% in the previous quarter.

Credit Cards

The interest rate on credit cards saw its first decrease since the fourth quarter of 2021.  The interest rate for the second quarter of 2024 was 21.51%, falling from 21.59% in the previous quarter. Before this quarter, the rate experienced nine consecutive quarterly increases, with a dramatic increase of 2.8 percentage points from Q3 2022 to Q4 2022. This aligns closely with the Federal Funds Effective Rate increasing 1.47 percentage points during the same period, the highest increase since the 1980s.

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This article was originally published by a eyeonhousing.org . Read the Original article here. .

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Share of Remote Workers Increases Despite Drop in Weekly Teleworked Hours

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The total share of workers teleworking or working from home for pay has increased from 2023, according to the latest Telework or Work at Home for Pay Survey from the Bureau of Labor Statistics. In June 2023, 19% of the labor force teleworked on a non-seasonally adjusted basis. This share rose to 22.3% in June 2024, even though the total number of workers remained stable. However, the average weekly hours of remote work among teleworkers decreased slightly by 1.7 hours, from 28.7 to 27 hours a week. This decline is due to a shift toward hybrid work, with the proportion of people working all their hours remotely dropping from 53.2% to 48.4%.

Across all occupations, the share of teleworkers has increased, while the average weekly telework hours have declined. Management, professional, and related occupations had the highest share of teleworkers, with 37.8% working remotely in June, averaging 27.1 hours per week. In contrast, natural resources, construction, and maintenance occupations had the lowest share, with only 3.0% teleworking for an average of 21.4 hours a week.

By industry, financial activities saw the largest increase in teleworkers, rising by 7.5 percentage points from 44.9% in June 2023 to 52.4% in June 2024. Meanwhile, the average weekly telework hours for this industry decreased modestly from 30.4 hours to 28.8 hours. The information industry, previously the leader in telework, increased by 3.8 percentage points, from 47.8% to 51.6%. Its average weekly telework hours declined by 1.1 hours, from 31.4 to 30.3 hours.

The increase in teleworking has significant implications for the housing and real estate market. With more people working from home, there may be a growing demand to remodel their current homes to have dedicated office spaces. Additionally, commercial real estate could face challenges as businesses reconsider their office space needs, potentially leading to an increase in flexible workspaces or a reevaluation of leasing strategies.

There are also policy proposals that NAHB supports which aim to repurpose underused commercial spaces into residential real estate, such as the “Revitalizing Downtowns and Main Streets Act” that proposes a 20% tax credit to encourage converting vacant commercial properties into affordable housing, thereby addressing the nationwide housing shortage.

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