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WASHINGTON – More findings from the Federal Reserve Board’s Survey of Consumer Finances for 2004 revealed an increase in assets for families headed by persons 35 years old and younger and minority families. More than 4,500 families were interviewed for the 2004 survey, which provides data on family income and net worth since the Fed conducted a similar survey in 2001. Assets here are considered transaction accounts, certificates of deposit, stocks, bonds, other investments and insurance. The largest increases in the proportion holding any asset were among nonwhite or Hispanic families, families with a head who was not working, renters, and families in the bottom quartile of the wealth distribution. Between 2001 and 2004, the median real value of assets among families having any asset rose 10.3%, from $156,800 to $172,900. Declines in the percentage shares of direct holdings of publicly traded stocks, cash value life insurance, and “other managed assets” were approximately balanced by increases in the shares of retirement accounts, pooled investment funds, and transaction accounts, the survey said. After showing a declining trend in earlier survey years, the share of certificates of deposit edged up. The Fed also looked at nonfinancial asset ownership such as cars, homes, equity in nonresidential property and business equity. In 2004, the level of ownership of nonfinancial assets was 92.5%, 1.8 percentage points higher than in 2001. Across most of the demographic groups profiled, the 2004 rate was about 90% with the exceptions occurring among lowest income and wealth groups, nonwhite or Hispanic families, families headed by persons who were neither working nor retired, and renters. The share of families with any type of debt climbed 1.3 percentage points from 2001 to 2004 to 76.4%. Borrowing is less prevalent among families in the lowest income and wealth groups and in age groups 65 or older, the findings showed. Over the 2001-04 period, the prevalence of borrowing declined for renters, the youngest age group. The largest increase was the 11.1 percentage point rise for families headed by persons aged 75 or older. Across demographic groups, median debt tends to rise with income and wealth and to rise and then decline with age, according to the survey. The decline among older age groups is driven in large part by the paying off of mortgages on primary residences. Over the recent three-year period, the median amount of outstanding debt rose for all groups except for families headed by persons who were neither working nor retired. The increases in the median were particularly notable for families headed by persons aged 65 or older. In 2004, 45.0% (42.3% in 2001) of families had a first-lien mortgage, 4.2% (5.8% in 2001) had a junior-lien mortgage, and 8.6% (4.8% in 2001) had a home equity line of credit with a current balance. With house prices rising over the past three years, the Fed noted much discussion has centered on how families have managed to finance the purchase of a new home. Interest rates are a key determinant of the size of the regular payment that families must make to service their mortgages. According to the survey, the median rate on the stock of outstanding first-lien mortgages on primary residences was 5.90% in 2004 and 7.25% in 2001. Some families select a mortgage with a variable interest rate, typically because such loans have a lower initial rate than a fixed-rate loan, the Fed said. In 2004, 15.0% of homeowners with a first-lien mortgage on the primary residence had an interest rate on their loan that could vary; the comparable figure for 2001 was 11.4%. When it comes to lenders, there was a 1.2% increase in relationships with savings and loans and savings banks, reversing a previous trend of 1.4%, according to the data. The share for commercial banks moved up one percentage point between 2001 and 2004 while the share for credit unions fell 1.9 percentage points. -

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