a sizeable increase in consumer debt overall household debt fell by $74 billion
in the third quarter of 2012, driven largely by a decrease in mortgage and home
equity loan balances. The Federal Reserve Bank of New York's Quarterly
Report on Household Debt and Credit reported that a drop of $120 billion in
mortgage debt and $16 billion in home equity lines of credit were partially
offset by a 2.3 percent increase in non-real estate obligations.
drop in aggregate consumer debt continued a near-four year downward trend. At of the end of the quarter (September 30)
total consumer indebtedness was $11.31 trillion, 0.7 percent lower than in the
second quarter and $1.37 trillion less than the peak household debt hit in the
third quarter of 2008.
debt, the largest component of the aggregate, now stands at $8.03 trillion,
down 1.5 percent from the previous quarter and the lowest level since
2006. The decline has come in spite of
the fourth consecutive increase in mortgage originations with $521 billion in
new mortgage debt appearing on consumer credit reports.
other major components of debt increased.
Student loan debt increased by $42 billion to $956 billion. The Federal Reserve reports, however, that of
the $42 billion only $23 billion is new debt while the remaining $19 billion is
attributed to previously defaulted student loans that have been updated on
credit reports this quarter, increasing the 90+ day delinquency rate for
student loans to 11 percent.
balances on auto loans increased by $18 billion to $768 billion, the highest
level in nearly four years and the sixth quarter this debt has increased. Originations increased by 4.4 percent to
$85.8 billion, the third consecutive quarterly increase.
card balances were up $2 billion while aggregate credit card limits were down
0.3 percent or $9 billion during the quarter.
There are 382 million open credit card accounts, down slightly from the
second quarter, while the number of credit inquiries decreased by one million
to 167 million over a rolling six month period.
increase in mortgage originations, auto loans and credit card balances suggests
that consumers are slowly gaining confidence in their financial position," said
Donghoon Lee, senior economist at the New York Fed. "As consumers feel more
comfortable, they may start to make purchases that were previously delayed."
Overall, delinquency rates improved slightly in the third
quarter to 8.9 percent of outstanding debt compared to 9.0 percent in the
second quarter. This equates to about
$1.01 trillion of delinquent debt, approximately $740 billion of which is
seriously delinquent, i.e. 90+ days past due.
percentage of auto loan debt that is seriously delinquent was unchanged at 4.2
percent while student loan debt, as noted above, rose to 11 percent. Delinquency rates for mortgages decreased
from 6.3 percent to 5.9 percent and new foreclosures are returning to their
pre-crisis levels with new foreclosure notices added to 242,000 consumer credit
reports. This was the lowest number in nearly six years. Home equity lines of credit delinquencies
remain high by historical standards at 4.9 percent.
Delinquency transition rates for current mortgage accounts were roughly unchanged, with 1.9% of current mortgage balances transitioning into delinquency. However, the rate of transition from early (30-60 days) into serious (90 days or more) delinquency increased to 26.3%, up by 2.8 percentage points from the
second quarter. Furthermore, the cure rate - the share of balances that transitioned from 30-60 days delinquent to current - saw a second consecutive decline to 26.4%.
About 354,000 consumers had a bankruptcy notation added to their credit reports in 2012Q3, a 16.3% drop from the same quarter last year, and the seventh consecutive drop in bankruptcies on a year-over-year basis.