Dmytro Skrypnykov
Credit card delinquencies in Q4 2023 reached their highest levels on record since the Federal Reserve Bank of Philadelphia started tracking the data in Q3 2012, while new mortgages appear to be riskier amid rising housing costs.
"Credit card performance further deteriorated at the end of 2023, with firms recording the worst 30+, 60+, and 90+ account-based days past due levels," the bank's report said.
Nearly 3.5% of credit card balances were at least 30 days past due as of Q4-end. "Stress among cardholders was further underscored in payment behavior, as the share of accounts making minimum payments rose 34 basis points to a series high from last quarter's reading."
While the share of accounts making full balance payments ticked up 8 bps in Q4, the 3.1% increase in revolving balances implies higher card balances among a smaller group of revolvers.
"Current credit scores at the 10th and 25th percentiles of cardholders decreased to their lowest levels since Q1 2020, indicating further performance deterioration could be on the horizon," the report warned.
Meanwhile, mortgage originations declined to a series low in Q4 as market headwinds continued to stifle demand, and the data hinted at a possible change in the risk approach of firms.
Underscoring affordability issues, the median front-end debt-to-income ratio rose 500 bps from its Q4 2021 level, while median origination loan size and loan-to-value increased 9.3% and 900 bps, respectively, over the same period.