The Good News & Bad News in the Latest Debt Figures

At first glance, the latest Federal Reserve figures are encouraging, showing that household debt fell by $74 billion or 0.7 percent in the third quarter.

However, the decrease is almost entirely from mortgage debt which is the largest factor of household debt. The non-real estate household debt actually increased 2.3 percent to $2.7 trillion during the third quarter.

Debt rose from student loans ($42 billion), auto loans ($18 billion) and credit card balances ($2 billion), according to the Quarterly Report on Household Debt and Credit by the Federal Reserve Bank of New York.

The report showed there are 382 million open credit card accounts, down slightly from the previous quarter. In addition, the number of credit inquiries within six month decreased for the third consecutive quarter. Yet, balances on credit card accounts increased by approximately $2 billion. Aggregate credit card limits were down $9 billion or 0.3 percent during the quarter.

Other findings include:

  • Delinquency rates on student loans continue to rise and have now surpassed the delinquency rate of credit cards. Of the total student loans, 11 percent were delinquent, an increase from 9 percent in the second quarter. This is also higher than the 10.5 percent of the credit card accounts that are delinquent. Delinquency rates were down to 5.9 percent on mortgages, steady at 4.9 percent on home-equity lines of credit and 4.3 percent on auto loans.
  • Outstanding student loan debt was $956 billion, up $42 billion since last quarter. $23 billion was new debt.
  • Outstanding auto loan debt was $768 billion, the highest in almost four years.
  • Mortgage debt was $8.03 trillion, the lowest level since 2006.
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