America Has Lower Household Debt, but Higher Personal Debt

November 27, 2012 by Jon C. Ogg

Source: Flickr, Images of Money
There is a report on the national household debt from the Federal Reserve Bank of New York showing a decrease in household debt by Americans. Today’s report in the third quarter of 2012 showed a decrease in overall debt balance, but that is despite a rise in non-real estate debt. In short, consumer and personal deb is up while debt pertaining to housing is down.

Data was taken from the New York Fed’s Consumer Credit Panel, a nationally representative random sample drawn from Equifax credit report data. All in all, total consumer indebtedness shrank by some $74 billion to $11.31 trillion and that represents a decline of 0.7% from the prior quarter.

Non-real estate household debt was shown in this report to have risen by 2.3% to $2.7 trillion due to a boost in student loans of $42 billion, auto loans with a gain of $18 billion, and credit card balances gaining by $2 billion. The total reduction in overall debt was attributed to a decrease in mortgage debt of $120 billion as well as a drop in home equity lines of credit of $16 billion. That drop in debt tied to housing was despite mortgage originations increasing for a fourth consecutive quarter.

Here are some highlights featured in the report:

  • Outstanding student loan debt now stands at $956 billion, an increase of $42 billion since last quarter ($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). The percent of student loan balances 90+ days delinquent increased to 11% this quarter.
  • Outstanding auto loans of $768 billion were the highest in nearly four years.
  • Mortgage debt at $8.03 trillion is at its lowest level since 2006 and delinquency rates for mortgages decreased from 6.3% to 5.9%. New foreclosures are returning to their pre-crisis levels (about 242,000 consumers had a new foreclosure added to their credit report) to the lowest in nearly six years.
  • Mortgage originations (new mortgages on consumer credit reports) rose for the fourth consecutive quarter to $521 billion.

FULL HOUSEHOLD DEBT REPORT

JON C. OGG

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