Forbearance Participation Declines as Programs’ End Nears

Haughwout, Andrew F.; Lee, Donghoon; Scally, Joelle; Van der Klaauw, Wilbert

Discussion Paper

Forbearance Participation Declines as Programs’ End Nears

Abstract: The Federal Reserve Bank of New York’s Center for Microeconomic Data today released its Quarterly Report on Household Debt and Credit for the second quarter of 2021. It showed that overall household debt increased at a quick clip over the period, with a $322 billion increase in balances, boosted primarily by a 2.8 percent increase in mortgage balances, a 2.2 percent increase in credit card balances, and a 2.4 percent increase in auto balances. Mortgage balances in particular were boosted by a record $1.22 trillion in newly originated loans. Although some borrowers are originating new loans, struggling borrowers remain in forbearance programs, where they are pausing repayment on their debts and creating an additional upward pressure on outstanding mortgage balances.

Keywords: Consumer Credit Panel; CCP; forbearance;

JEL Classification: D14;