with some caveats. first, these aggregate statistics can mask some important variations, and there are some local markets where, as in the prior boom, both house prices and mortgage growth are quite strong. similarly, there exist substantial differences across households in their financial situation and their ability to improve their balance sheets. borrowers with little equity, low credit scores and slow income growth face difficulties refinancing into low rate mortgages. as a result, this subset of the population has been less able to deleverage and still faces bis central bankers ’ speeches relatively high debt service costs, which constrains their consumption, investment and saving behavior. so, even within what looks to be a stable overall mortgage market, there are some things that we must continue to monitor. second, there are other difficult challenges that many households face, particularly with respect to a subject we ’ ve discussed on previous occasions – student loans. on balance, though, households are in a much better position today than they were in 2008. now, i ’ d like to turn things over to our economists, beginning with andrew haughwout, who will provide a more detailed discussion of household sector finances. bis central bankers ’ speeches

phase to repair their balance sheets by paying down outstanding debt. during this “ great deleveraging, ” which lasted five years, households reduced their overall liabilities by 12 percent or $ 1. 5 trillion. house prices began to rise again in earnest in 2012, and by mid - 2013 household deleveraging appeared to have come to an end. net household borrowing resumed, and household debt has risen over 8 percent during the last couple of years. but, this recent period of credit expansion looks very different from the early 2000s, and i believe that the household sector today is in much better health. there are several reasons for my confidence. let me begin with the situation in the residential mortgage market, which plays such a dominant role in household finance and was such a problem the last time around. currently, house price growth is running nationally at around 5 percent per year. but this time, households appear to be much more cautious in how they are responding to the rise in home values. rather than borrowing against the rising equity in their homes, mortgage balances have instead essentially stabilized and remain well below their previous levels. as my colleagues will describe in more detail shortly, this stabilization reflects an increase in debt paydown due to a combination of lower interest rates, shorter loan terms and aging of mortgages. this trend is reflected in increased household saving and growing home equity, and we expect these trends to continue to help households rebuild their balance sheets over the near term, thereby further increasing the household sector ’ s resiliency to shocks. low interest rates have also been important in driving the household debt service ratio to the lowest levels observed in our data. this means that households have more capacity with which to absorb any temporary adverse income shocks. one clear reflection of these improvements is the very significant decline in delinquency rates. at this point, the great majority of the bad debt from the boom years has been charged off and new foreclosures are at the lowest level we ’ ve seen in our data. the combination of charge - offs and tight mortgage underwriting standards over the last several years has shifted the stock of outstanding mortgage balances toward lower - risk borrowers, who are typically older with more stable incomes. for all these reasons, the household sector looks much better positioned today than in 2008 to absorb shocks and continue to contribute to the economic expansion. now, before asking my colleagues to discuss some of these trends in more detail, let me note that my positive overview of the household sector comes