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LATEST CORELOGIC ECON TWEETS

Mortgage Debt Outstanding Rose by 1 Percent in Q3 2015

The Latest Report Marks a Year of Growth in Mortgage Debt

Molly Boesel    |    Mortgage Performance

The Federal Reserve released the third-quarter Flow of Funds1 data last week, and the results might reveal a turning point of sorts for the U.S. housing market.

Included in the Flow of Funds is the amount of mortgage debt held by households, which is a key residential housing market indicator. The accompanying chart shows the amount of mortgage debt outstanding (MDO) held by households and non-profit organizations. MDO in Q3 2015 was just shy of $10 trillion and increased by $52 billion, or 0.5 percent, quarter over quarter and $88 billion, or 0.9 percent, year over year. MDO peaked at $11.3 trillion in Q1 2008, and the Q3 2015 value was 12 percent below that peak.

The chart also shows that MDO decreased year over year for two full years starting in Q4 2008 following the housing market downturn. Small year-over-year increases in MDO started in Q4 2014, and the Q3 2015 release shows the fourth consecutive MDO gain, which might signify a sustainable turning point in mortgage debt growth.

During the housing market boom in the early 2000s MDO growth was fueled by mortgage equity withdrawals. The latest small gains in MDO can be attributed to increases in home sales and home prices, and decreases in cash sales mortgage liquidations from foreclosures.

[1] http://www.federalreserve.gov/releases/z1/Current/

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