Home mortgages are households’ largest source of debt. And since 2010, student loans have been their second-largest source of debt.

The FRED Blog has discussed student loan and household debt before, in relation to overall economic activity. Today, we compare student loan debt with three other categories of consumer credit:

• Revolving consumer credit, mostly credit card debt (blue area)
• Automobile loans (green area)
• Student loans (orange area)
• Other, non-revolving consumer credit (purple area)

The FRED graph above shows quarterly data on each category from the Board of Governors of the Federal Reserve System. The units are in millions of dollars, but are presented in stacked areas to easily show each category as a percentage of the entire pool of consumer credit.

Data on student loans, as a standalone category of consumer credit, has been reported only since 2006, so we can’t observe the rollout of the Federal Direct Student Loan Program in 1994. But the growing share of student loans, as a fraction of overall consumer credit, is easy to see: It’s risen from 20.6% in 2006 to 35.6% in 2024. Learn even more here.

How this graph was created: Search the alphabetical list of FRED releases for “Z.1 Financial Accounts of the United States” and select “Quarterly: L.222 Consumer Credit.” Select the four series listed under the heading “Memo” naming the types of consumer loans and click “Add to Graph.” Use the “Format” tab to change the graph type to “Area” and the stacking option to “Percent.”

Suggested by Diego Mendez-Carbajo.

At its September 2024 meeting, the Federal Open Market Committee (FOMC) cut its target range for the federal funds rate by 50 points, marking the beginning of a new easing cycle. In the months after, the 10-year Treasury yield rose from 3.65% on September 17, 2024, to a recent peak of 4.79% on January 13, 2025.

The FRED graph above shows 10-year Treasury yields for the past decade. An increase in long-term interest rates such as the 10-year Treasury yield is highly unusual at the beginning of a Fed easing cycle.

To investigate this dynamic, we can analyze the term premium: The term premium is the difference in the returns an investor expects to earn from (i) buying and holding long-term debt such as a 10-year Treasury bond and (ii) buying short-term debt and reinvesting it once it reaches maturity, such as buying 1-year bonds and rolling them over into new 1-year bonds every year for 10 years. In other words, it’s the amount of compensation investors demand for the risks inherent in investing in longer-term vs. shorter-term debt.

To compute the term premium, we need to estimate future short-term interest rates. In our second FRED graph, above, we present a term premium measure on a 10-year zero-coupon bond estimated by economists at the Federal Reserve Board. (Note that FRED also has term premia measures for bonds with maturities between 1 and 9 years.)

On January 13, 2025, the 10-year term premium reached its highest level since 2011, surpassing 0.8%. At that time, investors required a rate that was 0.8 percentage points higher to invest in long-term over short-term bonds for the same duration. As of May 2, the term premium stood at 0.5%, up from 0.05% before the September 2024 FOMC meeting. That is, the higher term premium accounts for more than half of the recent rise in 10-year Treasury yields, suggesting investors associate greater risk and uncertainty with investing in longer-term debt.

How these graphs were created: Search FRED for and select “Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis.” For the second graph, search for and select “Term Premium on a 10 Year Zero Coupon Bond.”

Suggested by Brooke Hathhorn and Mark Wright.

FRED has data on an array of consumer expectations, confidence, and sentiment that can potentially yield information about future economic conditions.

FRED recently added the home purchase sentiment index (HPSI) to that collection of data. Reported by Fannie Mae, the HPSI is a composite index designed to track consumers’ housing-related attitudes based on six questions from the National Housing Survey:

• Is it a good time to buy or sell a house?
• Will home prices and mortgage interest rates rise, fall, or stay put?
• How concerned are you about losing your job?
• How does your current income compare with last year’s?

The index has a value of 60 in March 2011, its reference period. Its March 2025 value (latest available at the time of this writing) is 68.1, with a high of 93.8 in August 2019 and a low of 56.7 in October 2022.

The FRED graph above shows the HPSI (solid blue line) along with the University of Michigan’s overall consumer sentiment index (dashed green line). Between March 2011 and March 2025, these indexes have broadly moved hand in hand. That may not be surprising because overall consumer sentiment encompasses home purchase sentiment.

But, since 2020, changes to housing market conditions affecting the financial burden of households may have driven these sentiments apart. For example, some estrangement is visible from mid 2021 to mid 2022, with a wider gap between the two lines.

To learn even more about the HPSI, see this Economic Letter published by the San Francisco Fed.

How this graph was created: Search FRED for and select “Fannie Mae’s National Housing Survey: Home Purchase Sentiment Index (HPSI).” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “University of Michigan: Consumer Sentiment.” Make sure to click “Add data series.” Change its units to be 100 on 2011-03-01 and apply the formula (a/100)*60 so that it has the same reference period and base value as the HPSI.

Suggested by Diego Mendez-Carbajo.