Why is the Default Rate So Low? How Economic Conditions and Public Policies Have Shaped Mortgage and Auto Delinquencies During the COVID-19 Pandemic

Lisa Dettling and Lauren Lambie-Hanson

No 2021-03-04-2, FEDS Notes from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Delinquencies and defaults on household debt typically closely follow the business cycle. As economic conditions deteriorate, falling employment and incomes put a strain on family finances, leading to a rise in missed debt payments and defaults. Yet, against the backdrop of a historic rise in unemployment associated with the COVID-19 pandemic, delinquencies have fallen. This FEDS Note documents trends in delinquency on mortgages and auto loans during the COVID-19 pandemic, and unpacks how changes in economic conditions and public policies have been associated with borrowers’ debt repayment behavior.

Date: 2021-03-04
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfn:2021-03-04-2

DOI: 10.17016/2380-7172.2854

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