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Households Cut Another $110 Billion In Debt Even With $577 Billion In Q1 Mortgages Originated: Most Since 2007

Tyler Durden's picture




 

Q1 was another quarter in which recent patterns in household debt continued.

As we report every month, non-housing revolving credit balances continue to be flat, although we now have some more granularity, with the Fed adding that the "number of credit inquiries within six months – an indicator of consumer credit demand –declined again the bulk of household leverage driven by non-revolving debt."  Specifically, "there were 158 million inquiries in 2013 Q1, down from the 164 million inquiries seen in the previous quarter."

The balance of non-housing debt, and this is the part that is rapidly rising, is in the form of auto and student loans, both of which increase substantially in Q1, 2013, with student debt rising $20 billion to $986 billion, further propelling this debt category as the largest single form of debt, well above car loans which totaled $790 billion, and where $78 billion in newly created loans were issued in the past quarter. Elsewhere, total mortgage debt on consumer credit reports dipped once more, declining $101 billion to $7.93 trillion, while HELOC balances declined by another $11 billion to $552 billion.

Total average household debt on a per capita basis declined by $790 to $46,270 from $47,060 in the previous quarter, dashing David Rosenberg's visions of long-term growth and a household deleveraging. Naturally, the biggest debt component was Mortgage debt amounting to just under $33,000 for the average American.

It is not immediately clear how much of the net drop in mortgage balances from $8.033 trillion to $7.932 trillion was due to defaults as opposed to actual pay downs and non-credit rating impairing deleveraging. We do know that a whopping $577 billion in new mortgages were opened in Q1, the highest since Q3 of 2007.

Which means that some $680 billion in mortgages should have been extinguished in one quarter. If this happened primarily via defaults and discharges, one can only wonder just how the bank balance sheets were not decimated in Q1. As a reminder, half a year ago we observed that the bulk of US mortgage debt reduction has come from defaults not from actual deleveraging.

Last and certainly not least, despite the NY Fed's attempts to make the US credit picture rosier than it is, we learned that a record 14.64% of US consumers are now in "collections" status with their local, friendly credit agency (for an average amount of $1433). Bullish for credit collectors.

More from the Fed's breakdown of household debt:

Aggregate consumer debt declined in the first quarter, by $110 billion, resuming the longer-term downward trend. As of March 31, 2013, total consumer indebtedness was $11.23 trillion, 1.0% lower than its level in the fourth quarter of 2012. Overall consumer debt remains considerably below its peak of $12.68 trillion in 2008Q3.

Mortgages, the largest component of household debt, fell in the first quarter of 2013. Mortgage balances shown on consumer credit reports stand at $7.93 trillion, down $101 billion from the level in the fourth quarter of 2012. Balances on home equity lines of credit (HELOC) dropped by $11 billion (2.0%) and now stand at $552 billion. Household non-housing debt balances were roughly flat, with increases in auto and student loans, by $11 billion and $20 billion respectively, offset by decreases in credit card balances ($19 billion) and other consumer loan balances ($10 billion).

Delinquency rates continue to show improvements across the board in 2013Q1. As of March 31, 8.1% of outstanding debt was in some stage of delinquency, compared with 8.6% in 2012Q4. About $909 billion of debt is delinquent, with $678 billion seriously delinquent (at least 90 days late or “severely derogatory”).

Delinquency transition rates for current mortgage accounts improved during the first quarter of 2013, with 1.6% of current mortgage balances transitioning into delinquency in the first quarter. The rate of transition from early (30-60 days) into serious (90 days or more) delinquency fell noticeably to 22.8%, while the cure rate – the share of balances that transitioned from 30-60 days delinquent to current – improved in the quarter increasing to 34.7%.

About 309,000 consumers had a bankruptcy notation added to their credit reports in 2013Q1, a 16.8% drop from the same quarter last year, and the ninth consecutive drop in bankruptcies on a year-over-year basis.

 

Housing Debt

  • Originations, which we measure as appearances of new mortgage balances on consumer credit reports, rose to $577 billion. The level of originations has been increasing since bottoming out in the third quarter of 2011.
  • About 184,000 individuals had a new foreclosure notation added to their credit reports between January 31 and March 31. Foreclosures are down 12.5% from the previous quarter, the fourth consecutive quarterly decline, and 68% below the peak of 566,000 new forclosures in the second quarter of 2009.
  • Mortgage delinquency rates continued to improve in 2013Q1, with 5.4% of mortgage balances 90+ days delinquent, compared to 5.6% in the previous quarter.
  • Delinquency rates in Home Equity Lines of Credit dropped again, from 3.5% in 2012Q4 to 3.2% in 2013Q1.

Student Loans

  • Outstanding student loan balances increased by $20 billion during the first quarter, to a total of $986 billion as of March 31, 2013.
  • The 90+ day delinquency rate on student loans dropped and stands at 11.2%, down from 11.7% in 2012Q42

Credit Cards and Consumer Credit Demand

  • Aggregate credit card limits were roughly flat during the quarter
  • There are 383 million open credit card accounts, unchanged from 2012Q4.
  • Balances on credit cards accounts fell by approximately $19 billion.
  • The number of credit inquiries within six months – an indicator of consumer credit demand –declined again. There were 158 million inquiries in 2013Q1, down from the 164 million inquiries seen in the previous quarter.

Auto Loans

  • Auto loan originations dropped in the first quarter of 2013. During the first quarter, there were $78 billion in newly
    originated auto loans, down 12.3% from the previous quarter.
  • The percentage of auto loan debt that is 90 or more days delinquent fell slightly to 3.9%.

Full presentation:

 

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Tue, 05/14/2013 - 11:46 | 3560717 LawsofPhysics
LawsofPhysics's picture

Shadow banking debt? What is the CDS market up to now?  Please...

Tue, 05/14/2013 - 11:47 | 3560721 dereksatkinson
dereksatkinson's picture

Doesn't matter..  All the MBS market is owned by the fed at this point.

Tue, 05/14/2013 - 11:53 | 3560759 ghandi
ghandi's picture

"a record 14.64% of US consumers are now in "collections" status."

 

When collections call, just have a recorded message that sounds like the number has been disconnected.

 

Problem solved.

Tue, 05/14/2013 - 11:56 | 3560778 tsx500
tsx500's picture

i didn't even read the article or charts or anything....all i know is that it's BUUUUUULLLLLISH  !!!!!!!!!!!!

Tue, 05/14/2013 - 12:06 | 3560826 camaro68ss
camaro68ss's picture

My family knows a VP from JPM. Her quote was " these books (JPM) will never balance. We keep Hiring people, i dont know why and the books are a mess. THEY WILL NEVER BALANCE"

Did you catch that, JPM is hiring! Bullish!!!

Tue, 05/14/2013 - 12:06 | 3560830 Teamtc321
Teamtc321's picture

Green, green shoots everywhere..............

 

Foward!!!

Tue, 05/14/2013 - 11:56 | 3560780 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

When collections call, just have a recorded message that sounds like the number has been disconnected.

Even better: stop paying your phone bill and let it get disconnected. The money you save will be part of the aggregate increase in consumer spending.

Praise Bernanke, we're saved!

Tue, 05/14/2013 - 16:44 | 3562141 Sokhmate
Sokhmate's picture

"the person you're trying to reach has been disconnected or is no longer in service."

 

Tue, 05/14/2013 - 11:53 | 3560761 TheFourthStooge-ing
TheFourthStooge-ing's picture

Hey, it's all good. Employment is improving, and those people working 75 hours a week at new jobs (25hrs/week x 3 part-time jobs) are buying houses and living large.

Green shoots, baby!

Tue, 05/14/2013 - 12:02 | 3560805 camaro68ss
camaro68ss's picture

"just got done taking a 2nd on my house. Im buying a new boat. just maxed out my 3rd credit card.... life is good. This bull will never stop." - Some shmoe from 08

Tue, 05/14/2013 - 14:15 | 3561531 MachoMan
MachoMan's picture

"just got done taking a 2nd on my house. Im buying a new boat. just maxed out my 3rd credit card.... life is good. This bull will never stop." - Some guy that had it figured out in 08 and has since had no repercussions from his spending habits nor slowdown in lifestyle.

Fixed it for you

Tue, 05/14/2013 - 11:56 | 3560774 LawsofPhysics
LawsofPhysics's picture

Okay fine, but the Fed (and the owners) care very much about their balance sheet.  Here's something that should scare the fuck out of them; mark it to market motherfuckers.

Tue, 05/14/2013 - 12:08 | 3560837 TheFourthStooge-ing
TheFourthStooge-ing's picture

No worries at all. The Fed has seen to it that there's no market to which to mark it.

Tue, 05/14/2013 - 12:11 | 3560851 Ham-bone
Ham-bone's picture

HAHAHAHAHAHA - quaint.  In time it will all be injested by the Fed and passed through to taxpayers...and then in the fullness of time it will be marked to market.

Tue, 05/14/2013 - 12:17 | 3560867 LawsofPhysics
LawsofPhysics's picture

HAHAHAHAHAHAHA - aweful optimistic that there will actually be some "taxpayers" left, halarious indeed.

Tue, 05/14/2013 - 11:58 | 3560789 gjp
gjp's picture

And WTF is going on with Fannie Mae / Freddie Mac.  Brought into 'protectorship' in the crisis, government swallowed enormous losses on their behalf after paying billions in dividends and executive comp to the private sector, and now 80% owned by the US Fed, still subsidizing housing, yet still paying big comp to execs and claiming profits 'paid back' to the govt!  What a farce!  Why didn't they just nationalize it fully?  What is the point of still pretending to be private sector?

Again, don't answer, I know what it is, more opportunity for corruption among the plutocrats

Tue, 05/14/2013 - 11:49 | 3560735 ParkAveFlasher
ParkAveFlasher's picture

$33,000 in mortgage debt on average?  Are these homeowners who bought in Nome, Alaska in 1978?

How much of the net reduction are mortgage-holders with substantial equity selling off and downsizing to a mortgage-free home?

Tue, 05/14/2013 - 12:16 | 3560868 Ham-bone
Ham-bone's picture

nice to know I'm above average (in something) - x20

Tue, 05/14/2013 - 11:51 | 3560744 Doubleguns
Doubleguns's picture

Cash is king but its fast approaching pauper status.

Tue, 05/14/2013 - 12:12 | 3560855 Coast Watcher
Coast Watcher's picture

Cash is king, but it's fast approaching paper status.

 

FIFY

Tue, 05/14/2013 - 11:51 | 3560750 Cognitive Dissonance
Cognitive Dissonance's picture

"Pull up, pull up. You're going to hit the trees." - Helicopter Ben to pilot.

Tue, 05/14/2013 - 11:55 | 3560773 The Thunder Child
Tue, 05/14/2013 - 12:03 | 3560818 TheFourthStooge-ing
TheFourthStooge-ing's picture

Ground control to Printer Ben,
We've just run out of ink again,
Can you hear me Printer Ben?
Can you hear me Printer Ben?
Can you hear me Printer Ben?

Tue, 05/14/2013 - 12:20 | 3560892 Cognitive Dissonance
Cognitive Dissonance's picture

Good news. You cannot run out of electronic ink.

Bad news. Helicopter Ben does not have a pilot flying the choppa.

Tue, 05/14/2013 - 11:51 | 3560751 madbraz
madbraz's picture

A few years back I would have partially believed the credit data that comes out of the Fed.  Today, I am quite certain that it is hogwash manipulated data, much like a bank balance sheet or a Fed survey.

Tue, 05/14/2013 - 11:53 | 3560756 kito
kito's picture

if a person can apply for a new fsa 3.5% mortgage 3 years after they go into foreclosure, id say that is deleveraging...................

Tue, 05/14/2013 - 12:06 | 3560825 Cognitive Dissonance
Cognitive Dissonance's picture

Only in Ponzi America can a man or women be afforded (sic) an opportunity for a fresh credit start so soon after their last credit failure.

<Cus it's all in the interest of national security bitches. Besides, everyone deserves a home to "Shelter in Place" in.>

Tue, 05/14/2013 - 12:17 | 3560881 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

Besides, everyone deserves a home to "Shelter in Place" in.

Well, hell yeah! If we've learned anything from Boston, it's that you can't shelter in place in one of your boats.

Tue, 05/14/2013 - 12:27 | 3560925 kito
kito's picture

should read fha loan....

Tue, 05/14/2013 - 11:56 | 3560779 razorthin
razorthin's picture

Manufactured garbage in, garbage out.

Tue, 05/14/2013 - 11:56 | 3560781 SheepDog-One
SheepDog-One's picture

Definitely good enough for another +150 close on the DOW I'm sure.

Tue, 05/14/2013 - 11:59 | 3560794 Catullus
Catullus's picture

I suppose you can release loan loss reserves when you no longer own the debt. Maybe they'll start using student loans as collateral.

Tue, 05/14/2013 - 11:59 | 3560798 maskone909
maskone909's picture

Damn i need to get my NMLS MLO License

Tue, 05/14/2013 - 12:00 | 3560802 northerngirl
northerngirl's picture

Student loans are up $20 Billion dollars, this is so not good.

Pay as you go, it will take longer to graduate from college, but graduating debt free is priceless. 

Tue, 05/14/2013 - 12:04 | 3560820 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

In a Free Shit Army country, pay as you go is for suckers.  See, Student Loan Foregiveness Act:

http://www.usnews.com/education/blogs/student-loan-ranger/2012/03/21/lea...

Tue, 05/14/2013 - 12:01 | 3560807 apberusdisvet
apberusdisvet's picture

Stores are empty; auto lots are overfilled (at one local Toyota dealer, there are now new cars on the grassy areas), but the casinos are jumping,  Go figure.

Tue, 05/14/2013 - 12:04 | 3560821 infinity8
infinity8's picture

I like to drive down the main road where most of the dealerships in town are located, in my beater, and wave at all the pacing, smoking sales guys.

Tue, 05/14/2013 - 12:12 | 3560856 maskone909
maskone909's picture

Lol poor bastards. Stoped by the dealership with my wife to pick her car up after servicing(the car not my wife) and those fuckers were on me like a cheap suit!!!! Barely made it out the parking lot. Worst of it all he was trying to get me to trade in my fully built 92 hatch turbo for a hybrid. Now that get me heated. "Come on bro... Guude inthrasratee bro" **heavey aribic accent

Tue, 05/14/2013 - 14:17 | 3561548 MachoMan
MachoMan's picture

I carry a nerf bat for just such an occasion.

Tue, 05/14/2013 - 18:56 | 3562575 pursueliberty
pursueliberty's picture

I disagree with the casino jumping part.  I've never had so many free rooms/meal comps.  Since the beginning of the year I've had 5 free nights and close to $100 in food vouchers and my wife and I are far from high rollers.  Hold'em actually only pays $1/hr in comps.  I took advantage of a free night last week and it was pretty dead. 

Tue, 05/14/2013 - 12:03 | 3560817 q99x2
q99x2's picture

Federal Reserve report. Not worth the electrons used by the pdf. Fuck the FED they have no credibility in this house.

Tue, 05/14/2013 - 12:05 | 3560823 Hulk
Hulk's picture

The J.O.B situation being what it is, I know a few people who are focused on paying off their mortgages as early as possible, while they still have jobs...

Tue, 05/14/2013 - 12:17 | 3560872 Cognitive Dissonance
Cognitive Dissonance's picture

It seems that those who wish to be prudent and practical will soon be declared terrorists and enemies of the state.

<As such their paid off home will be confiscated, then sold with the assets absorbed by the state, then redistributed to the "needy" debtors.>

Don't laugh too hard folks. That statement does appear to be the direction we're taking. Those who have real physical "wealth" will lose it to those who have paper debt.

Tue, 05/14/2013 - 12:22 | 3560897 maskone909
maskone909's picture

Yeah kinda scary when....
IF they ever stop qe how the fuck can they fund .gov???
Can you say 50% property tax?? What a joke home ownership is

Tue, 05/14/2013 - 14:19 | 3561559 MachoMan
MachoMan's picture

When you pay your property tax, it isn't to the federal government...

Tue, 05/14/2013 - 12:22 | 3560903 Cobra
Cobra's picture

Saddening... I do miss town house community renting, and the only real benefit to "owning" is the idea that you will, someday, be able to live in it for the low low price of taxes and insurance! I fight with myself on this...

Tue, 05/14/2013 - 12:28 | 3560930 TheFourthStooge-ing
TheFourthStooge-ing's picture

If it comes to that, it'll be time to blow up the bridge over Simpson's Swamp and secede from the state.

Let's see how the governor spins that in his state of the state statement.

Tue, 05/14/2013 - 12:16 | 3560873 Cobra
Cobra's picture

I'm on that list... $500 extra principle monthly.

Tue, 05/14/2013 - 12:29 | 3560937 MachoMan
MachoMan's picture

Why the fuck would you pay it off early when those prepayments don't reduce your monthly required payment?  Set up a sinking fund and have the discipline not to touch it...  if you get ass cancer or your kid gets in a car wreck, then you can rest assured you'll get service...  pick some date in the future and re-finance and pay down extra amounts then, if that's your bag...  otherwise, you're just throwing liquidity away at a time where flexibility is king.

Tue, 05/14/2013 - 12:37 | 3560973 Cobra
Cobra's picture

Because if I pay $1,700 / mo for 7 years ($142,800) we'll own it.
If I pay $1150 for 27 more years ($372,600) - do you see the difference?

Tue, 05/14/2013 - 12:57 | 3561080 Cognitive Dissonance
Cognitive Dissonance's picture

Or you can put the extra $500 a month in the stock market and make a bajillion $'s in 10 years.

/sarc

Tue, 05/14/2013 - 13:37 | 3561295 LawsofPhysics
LawsofPhysics's picture

In a stable county I hope, otherwise head's up for those future property taxes.  As a "tenant" of th Corporation of the United States, you don't "own" shit, ever.

Tue, 05/14/2013 - 14:25 | 3561588 Taffy Lewis
Taffy Lewis's picture

LoP: "In a stable county I hope" is an important statement and often left out in the ownership-rent debate.

Here in Kansas property taxes are relatively low and the local politicians will raise sales tax if they have to instead of property tax.

My family scrimped and saved for 3 years to pay down our house mortgage with extra payments, then refinanced at 2.75% for 10 years. The savings for making any extra payment on the principle isn't worth it; instead I'm building up cash (spread amongst the local banks & credit unions in town) with some PMs sprinkled in. Steadying the ship.

Tue, 05/14/2013 - 13:59 | 3561425 MachoMan
MachoMan's picture

You're not addressing my post...  Please answer the question.  If you do not receive a single dime of pecuniary benefit from making pre-payments (other than paying the entire loan balance), then why would you choose to do so given you will have lost that liquidity as well as any opportunity possibly derived therefrom?  Tell me this, if your daughter gets in a car accident and you need $25k to get her the surgery she needs, are you going to feel like an asshole when that $25k is tied up in your illiquid house?  If you have to take out a second or third mortgage on the beauty, how much are your transaction costs?

The point is simple...  put the money to repay your house loan aside...  in a separate fund (a sinking fund)...  contribute the extra $500/month to it...  and when it's big enough, then pay off the entirety of your note all at once.  Right now, you're simply reducing your liquidity with no corresponding pecuniary benefit.

Presuming of course that you actually have the fiscal discipline not to touch it in the meantime...

But please, keep asking rhetorical questions on irrelevant issues...  it's reasonable and beneficial to the community.

Tue, 05/14/2013 - 15:42 | 3561793 Cobra
Cobra's picture

Fuck it, I'll bite... When you pay extra principal payments it reduces the amount of interest they can levy, which starts the momentum going in your direction, not theirs. The extra money we pay hurts us none financially. If I pay the term I will pay $220,000 more than if I do it 'my way'. If you can tell me of a place to put $500 a month away for 7 years and have it net me $220,000 in savings, I'M ALL FUCKING EARS...

To answer your other inquiries, I have no kids, and the best health insurance available $23 / wk. - You know, like how it used to be. Throw down a $20 and all of your needs are taken care of. Yeah, I have THAT insurance.

EDIT: $220,000 assumes 20 years of not paying anything, so I re-calculated with paying $72,000 in taxes & insurance over those 20 years. So I ask: Is there anywhere I can put $500 a month where it will net me $148,000 in 7 years... Still all ears...

Wed, 05/15/2013 - 11:32 | 3564640 MachoMan
MachoMan's picture

Yes, I think we can agree that, technically speaking, you can reduce the amount of interest charged next month when you make a pre-payment of principal this month...  but you're missing a few important issues:

1.  How much do you actually save in interest for each of those monthly payments?  http://www.bankrate.com/finance/mortgages/pay-extra-toward-mortgage-prin... (If the mortgage interest rate is 4.5 percent, a month's worth of interest on a $100 prepayment of principal is 37.5 cents. No pot of gold at the end of that rainbow).  Practically speaking, on the short term, you earn NOTHING by repaying early.  Over the course of the next 7 years, what is your realized gain from repaying monthly instead of at the end of 7 years?  (not much).

2.  What is the effective rate of return on your money if you were to invest it?  Do you have any business opportunities?

3.  Is it possible that you would need any liquidity in the event of an emergency?  Do you already have a "reserve fund" in a sufficient amount to cover any prospective emergency, including a loss of income?

4.  Remember to reduce the rate on your note by any benefit/tax savings from the loan (e.g. home interest deduction) so that you're comparing apples to apples.

5.  What are interest rates doing?  Going up or down?  Are you paying off the loan with "good" dollars today, when "cheap" dollars are around the corner?  Are you paying off the note early when you're just going to refinance in a year or two at a materially lower interest rate, thereby significantly reducing the savings you project over time?

6.  Are there alternative products that might serve your needs, e.g. a "money merge account"?

In short, as stated in the article, your largest consideration is whether your investments are paying you more interest than your loans (do you have any?)...  Further, given the lack of benefit (over the short term) for repaying the mortgage early, there are a myriad of alternatives that may better minimize opportunity cost and maximize qualitative matters...  Ultimately, the rigidity of plugging away a set amount each month, in this fashion, is to be avoided.

Yes, technically speaking there is a cost for not repaying the principal immediately, but that cost is low (nothing) over the short term...  and, when considering everything, may be a bad move. 

 

Tue, 05/14/2013 - 12:05 | 3560827 cakeater
cakeater's picture

I would like to see a break down of the mortgages by judicial foreclosure states VS non judical foreclosure states.  The Tell shoud be thatthe judicial foreclosure states have unleashed a huge backlog of foreclosure activity which could account for the buy down of debt as those foreclosures roll over and the debt is finally written down to zero.  Most of that Realestate is some how now in the REO market how is that accounted for ?

Tue, 05/14/2013 - 12:24 | 3560913 LawsofPhysics
LawsofPhysics's picture

"Mark to fantasy" accounting bitch.  The value of those "assets" can be whatever the bank needs them to be, how they are accounted for is irrelevant.

Tue, 05/14/2013 - 12:13 | 3560859 pragmatic hobo
pragmatic hobo's picture

trickle-down-economy at it's finest; Bernanke should be very proud of his achievement.

http://www.dailymail.co.uk/news/article-2324202/Wealthy-moms-paying-1-00...

Tue, 05/14/2013 - 12:14 | 3560863 optimator
optimator's picture

Banksters up big, the Bernak must have put double Bennybucks in the system today.  Bank still owns very nice house near me, but to the many offers to buy the bank says, "not for sale".

Tue, 05/14/2013 - 12:22 | 3560899 LawsofPhysics
LawsofPhysics's picture

Treasury yields climbing still.  The PDs will be forced to buy as soon as the ten year gets too far above 2.0%.  It's a wonderful thing having access to free money (ZIRP) and being able to front-run yourself.

Tue, 05/14/2013 - 12:26 | 3560920 CuriousPasserby
CuriousPasserby's picture

I refinanced in the first quarter with a 2.49% fixed 10 year. Now if silver would just pop to $50 I could pay it off. But I'd probably wait for it to hit $100.

Tue, 05/14/2013 - 12:27 | 3560926 Benjamin Glutton
Benjamin Glutton's picture

Are you suggesting the Banks are still insolvent? Don't tell the deadbeat depositors cause they will demand to not be bailed out again and feign outrage when the bankers are bailed out instead.

 

Can anyone name a single listed business that was not bailed out between 2008 and 2010?

 

Take your time.

Tue, 05/14/2013 - 12:35 | 3560963 Dr. Engali
Dr. Engali's picture

Apple.

Tue, 05/14/2013 - 12:36 | 3560969 W T F II
W T F II's picture

Consumers are readying to buy stocks on their way to Wal-Mart, or maybe when they get to Wal-Mart...

Tue, 05/14/2013 - 12:41 | 3560999 Bastiat
Bastiat's picture

Did the households cut the debt or did the debt cut them?

Tue, 05/14/2013 - 13:02 | 3561104 Colonel Klink
Colonel Klink's picture

Debt saturation bitchez!

Tue, 05/14/2013 - 13:03 | 3561108 1C3-N1N3
1C3-N1N3's picture

.

with the Fed adding that the "number of credit inquiries within six months – an indicator of consumer credit demand –declined again

A good portion of those credit inquiries are for job applicants, too. Demand may be down harder than it appears.

Tue, 05/14/2013 - 14:21 | 3561570 MachoMan
MachoMan's picture

And for prospective tenants...  which is interesting in renter nation.

Tue, 05/14/2013 - 13:34 | 3561269 Son of Loki
Son of Loki's picture

Why pay for anything? Just pass the losses onto someone else...it's all the rage! Here's an older NYT article:

 

"John Courson, president and C.E.O. of the Mortgage Bankers Association, recently told The Wall Street Journal that homeowners who default on their mortgages should think about the “message” they will send to “their family and their kids and their friends.” Courson was implying that homeowners — record numbers of whom continue to default — have a responsibility to make good. He wasn’t referring to the people who have no choice, who can’t afford their payments. He was speaking about the rising number of folks who are voluntarily choosing not to pay."

 

http://www.nytimes.com/2010/01/10/magazine/10FOB-wwln-t.html?_r=0

 

I still see lots of people refusing to pay their credit cards, doctor biulls, mortgages, etc....takes forever to evict someone the courts are jammed. Good luck to landlords...they're gonna need it if the tenant is a deadbeat, or even worse, a destructive deadbeat.

Tue, 05/14/2013 - 13:43 | 3561310 Ignorance is bliss
Ignorance is bliss's picture

I save in PMs. I am waiting for the dollar to loose it's reserve currency status. I'll pay off my house after the dollar devaluation. That's why I dont accelerate my house payments. I don't believe government manipulations will be sustainable long term.

Also if you are accelerating the payments on your house, and you loose your job, you could potentially loose the additional equity you built up in the house. Better to save in PMs, and then buy the house out all at once when you have enough saved up. that assumes of course that the title is free iand clear after MERs puts it in your name.

The trick is to save while not exposing yourself to fraud or ponzi risk. There is jjust way too much fraud and crime for it not to be your number one consideration when investing in today's business climate.

Tue, 05/14/2013 - 14:28 | 3561597 MachoMan
MachoMan's picture

First, the title IS in your name...  creditors only have a lien on it, presuming they haven't screwed up the lien process (and they have in many instances).

Second, not to be the damn grammar police, but fucking hell man...  it's "lose"...  "loose" is an adjective for what borat thinks resembles a "mous of tire dog"

Third, good work on the sinking fund...  trying to give the same advice above but getting shit on...  apparently someone has some butt hurt from wasting his money.

Fourth, you can have plenty of deflation in the meantime before your PM play pays off...  possibly long enough to ensure you have to liquidate.  There is something to be said for keeping the currency of your debts and paying them off sooner, rather than later.

Tue, 05/14/2013 - 14:29 | 3561604 Taffy Lewis
Taffy Lewis's picture

I agree, Ignorance is Bliss. See my comment #3561588 in this thread. At a low interest rate, it's safer to store up dry powder than pay off a mortgage early.

Tue, 05/14/2013 - 19:06 | 3562596 Budd aka Sidewinder
Budd aka Sidewinder's picture

I thought after sub prime crisis - the minimum for a mortgage was 20% down and a great credit score.

How in the hell did $577BB of new mortgages get approved?????

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