NY Fed flags rise in student loan borrowing troubles in second quarter
The New York Fed said on Tuesday as part of its latest Quarterly Report on Household Debt and Credit that overall borrowing during the second quarter increased $185 billion, or 1%, from the first quarter to $18.39 trillion. Housing-related credit, which makes up the bulk of borrowing in the U.S. economy, ticked up $131 billion to $12.94 trillion.
The report noted that the overall move of different types of debt into some type of delinquency was 'elevated' during the second quarter, with 4.4% of overall borrowing hitting some level of delinquency, a very slight rise from what was seen in the first quarter.
The move into trouble status was 'mixed' across borrowing types, the New York Fed said, with delinquent mortgages and home credit lines up 'slightly' from the first quarter, with student loan woes up 'sharply.' The rise in troubled student loans was not unexpected given the recent ending of the debt payback moratorium and the return of reporting troubled borrowing to credit agencies.
Some 10.2% of student borrowing is now 90 or more days delinquent, the report said. What's more, New York Fed researchers expect the troubles for student borrowing to continue to rise.
Student loan borrowing challenges have been an ongoing issue for the overall economy as rising trouble there can impair other types of borrowing and cause lasting financial damage to those who are facing difficulties. During the second quarter total student loans were $1.64 trillion.
The New York Fed report also delved into housing trends and found that against a solid overall landscape where borrowing has been bounded by strict credit standards, there are rising issues with loans from the Federal Housing Administration, which exists to help facilitate first-time borrowers.
'Despite the recent uptick in mortgage delinquency, overall mortgage performance remains strong by historical standards,' said Joelle Scally, an economic policy advisor at the New York Fed, in a press release.
That said, New York Fed researchers wrote in a blog post accompanying the debt report that FHA mortgages 'have recently seen the steepest rise in delinquency rates, with transitions into 30 days past due exceeding four percent quarterly.' In terms of geography, they noted there were more troubled loans of this type in Southern states and Puerto Rico.
But they cautioned that what's happening now may be a return to where things were a few years ago. 'In a way, the current higher-flow delinquency rates are offsetting the artificially low-flow delinquency rates during the pandemic.'
Housing-related borrowing could face some headwinds going forward on current trends for home prices, the New York Fed researchers wrote. 'While home prices have only declined slightly, there is some risk that a continued decline in home prices may add pressure should more borrowers find themselves underwater.'
The New York Fed also noted second-quarter credit card debt rose $27 billion from the first quarter to $1.21 trillion, while auto-loan borrowing ticked up $13 billion over the same period to $1.66 trillion. Some of the rise in auto-related borrowing was tied to an uptick in car buying to get ahead of tariffs, bank researchers said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
11 minutes ago
- Reuters
Super Micro's quarterly results underwhelm, shares tumble
Aug 5 (Reuters) - Super Micro (SMCI.O), opens new tab missed Wall Street estimates for fourth-quarter revenue and profit on Tuesday, as the company battles larger server makers for high-performance computers used to train artificial-intelligence models. Shares of the San Jose, California-based company slumped nearly 15.5% in extended trading, as the results followed multiple cuts to its full-year guidance. Its forecast also fell short of its earlier lofty expectations. Super Micro projected revenue of at least $33 billion for fiscal year 2026. The company had predicted around $40 billion in annual sales in February. Analysts on average were expecting $29.94 billion, according to data compiled by LSEG. Super Micro has been gaining traction in the hyper-competitive server industry, but analysts have said larger rivals such as Dell Technologies (DELL.N), opens new tab and HP Enterprise (HPE.N), opens new tab have been able to leverage their vast customer base to boost sales. "Since we know the market for servers is very strong right now, it is safe to assume the disappointing results for Super Micro are due to share losses," said Gil Luria, managing director at D.A. Davidson & Co. "Their customers are very discerning right now and are choosing servers from Dell, HP and others," Luria added. Dell raised its annual profit forecast while Hewlett Packard Enterprise beat second-quarter revenue and profit estimates. Super Micro expects better chip availability for its fiscal year, when compared to the last two quarters, which will help it grow better, CEO Charles Liang said on a post-earnings call. Delays in the availability of Nvidia (NVDA.O), opens new tab processors had weighed on the company in the recent quarters. Super Micro's shares have climbed about 90% this year as of last close, as investors bet on strong demand for its AI servers and its liquid cooling solutions. "The expectations for all things related to AI, especially the large language and reasoning models, have captivated investors' attention. Any softness is met with deep disappointment, which means lower stock prices," said Kim Forrest, chief investment officer at Bokeh Capital Partners. Shares of Advanced Micro Devices (AMD.O), opens new tab fell in extended trading on Tuesday, after the chipmaker reported disappointing data center revenue. Super Micro, which is bouncing back from accounting-related issues, said revenue was $5.76 billion for the three months ended June 30, compared with analysts' average estimate of $5.89 billion. Its adjusted earnings of 41 cents per share fell short of estimates of 44 cents, primarily due to tariff impact.
The Independent
an hour ago
- The Independent
Apple... cinemas? Tech giant sues movie theater chain
Apple is suing another fruit-named company — Apple Cinemas — in an attempt to get the small theater company to change its name. Apple Cinemas has reportedly signed a lease to take over a historic cinema and a retail space in San Francisco that had previously been operated by AMC Theaters and CGV Cinemas. The purchase is part of Apple Cinema's overall goal of expanding to 100 locations across the country over the next 10 years. Apple entered a lawsuit on Friday in Massachusetts alleging that the theater company is infringing on its trademark and using its brand to trick consumers into thinking they're attending a cinema operated by the tech company. Apple does have a cinema division — Apple Studios — which it began in 2019, but Apple has been offering movie-adjacent entertainment since 1999 via its QuickTime Movie Trailers. The tech company also held cinema events, including some in connection with the Tribeca Film Festival. The cinema company began its operations in 2013 when it opened its first theater in Massachusetts. The company says its name is from it's initial plans to open its first theater in the Apple Valley Mall in New England, according to the Hollywood Reporter. The company primarily operated in the northeast until it laid out its plans to expand to San Francisco and other parts of the country in 2024. Sand Media — Apple Cinema's parent company — filed an application for the name "Apple Cinematic Experience" but was denied. A trademark examiner ruled that the name might cause confusion between Apple Cinemas and the tech company. Apple responded to that branding attempt by sending Sand Media a cease and desist letter. It further claims that Apple Cinemas began using a stylized apple for its logo and began focusing its expansion on malls and shopping centers where Apple Stores were already present. According to the lawsuit, the similar names resulted in landlords at these locations assuming that Apple Cinemas was affiliated with the tech brand. Apple alleges that Apple Cinemas was given favorable deals to open in some areas as a result of the presumed connection. Further driving the tech giant's lawsuit are claims that some customers have had negative experiences with Apple Cinemas. Some customers have complained that the theaters are "greasy," "dirty" and "grungy" and are at times beset by technical issues. 'Consumers should not go to an 'Apple Cinemas' theater thinking it is connected to the famous Apple brand, with all its goodwill and brand equity,' Miranda Means, an attorney representing Apple, stated in the lawsuit. Apple's goals with its lawsuit are to force the theater chain to stop using the word "Apple" in its name. It is also seeking damages, though the amount was unspecified.
The Guardian
an hour ago
- The Guardian
News Corp warns Trump AI is eviscerating sales of The Art of the Deal
News Corp is warning Donald Trump that AI is cannibalizing sales of his books, including The Art of the Deal. The company, owned by billionaire Rupert Murdoch, owns dozens of newspapers and TV channels around the world including the Wall Street Journal, the Times (in the UK), the Australian and the New York Post. News Corp also owns book publisher HarperCollins, which has published three of Trump's books, though his best-known title, The Art of the Deal, was published by Random House. Still, the company appeared keen to warn Trump about the impact AI is having on publishing. 'The AI age must cherish the value of intellectual property if we are collectively to realize our potential,' News Corp said in a statement with its fourth-quarter earnings report. 'Even the president of the United States is not immune to blatant theft. The president's books are still reporting healthy sales, but are being consumed by AI engines which profit from his thoughts by cannibalizing his concepts, thus undermining future sales of his books. 'Suddenly, The Art of the Deal has become The Art of the Steal.' Media outlets have sued AI companies, including OpenAI, operator of ChatGPT, for using their content to train AI models without permission. In May, a federal judge rejected OpenAI's request to dismiss a lawsuit from the New York Times over its usage of the newspaper's content. Dow Jones, which publishes the Wall Street Journal, and the New York Post sued Perplexity AI in October over similar copyright claims. News Corp's message to Trump also comes after the White House last month announced Trump's 'AI action plan' that would see the loosening of AI regulations that had been put in place under the Biden administration. In an earnings call Tuesday, News Corp CEO Robert Thomson said that the company is in the middle of 'advanced negotiations with several AI companies'. 'It's clear that many of them have come to recognize that the purchase of [intellectual property] is as important as the acquisition of semiconductors or the securing of stable energy sources,' he said, noting that it's a mix of 'wooing and suing'. 'We prefer the former, but we will never shy away from protecting our property rights,' he said. The warning comes at a tense moment between News Corp and the White House. Trump sued the Wall Street Journal after the newspaper published a report that the president had once sent Jeffrey Epstein an intimate birthday message that included a sexually suggestive drawing of a woman. Trump claimed that the report was false and amounted to libel. The newspaper has requested a judge dismiss the case. Murdoch, who also owns Fox News, was once friendly with Trump, though relations soured during the president's third presidential campaign. The company beat fourth-quarter expectations with Tuesday's earnings announcement, largely due to a rise in digital subscriptions from Dow Jones, which houses the company's business publications like the Wall Street Journal, Barron's and MarketWatch. On Monday, News Corp announced it will launch a sister tabloid to the New York Post in California, called the California Post, in early 2026.
