Overall Household Debt Approaches $13 Trillion in Third Quarter

Overall household debt in the U.S. reached $12.96 trillion in the third quarter this year, fueled mostly by increases in mortgage, student, auto and credit card balances, according to the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit.

The $116 billion increase in the third quarter put overall household debt $280 billion above its peak in the third quarter of 2008, according to the report.

“Mortgage balances, the largest component of household debt, increased again during the third quarter. Mortgage balances shown on consumer credit reports on September 30 stood at $8.74 trillion, an increase of $52 billion from the second quarter of 2017,” it states.

Credit card debt increased by $24 billion to a total of $808 billion in the third quarter while student loans increased by $13 billion and stands at $1.36 trillion as of Sept. 30, 2017.

The Fed also reports that, as of Sept. 30, 4.9 percent of outstanding debt was in some stage of delinquency and, “of the $630 billion of debt that is delinquent, $408 billion is seriously delinquent (at least 90 days late or ‘severely derogatory’).”

Consumers’ transition into serious delinquency for credit cards has been increasing at a notable rate for one year, according to the Fed. The serious delinquency rate increased from 4.4 percent in the second quarter to 4.6 percent in the third quarter, respectively.

“Delinquency flows across several debt types climbed this quarter, including for auto loans,” said Wilbert van der Klaauw, senior vice president at the New York Fed in a news release.

“Examining the auto loan market more closely revealed notable differences between auto finance and auto bank lenders. Delinquency rates among auto finance lenders are considerably higher and rising, especially for subprime borrowers, in part reflecting differences in underwriting standards.”

Additional findings in the report include:

• Outstanding student loan balances saw a small increase of $13 billion (increasing by 1 percent), while delinquency flows declined slightly. Student loan delinquency flows remain at a high level.

• The share of mortgage balances that were 90 or more days delinquent continued to improve, printing at 1.4 percent in the third quarter, down from 1.7 percent at the beginning of 2017, and substantially improved from the 8.9 percent high reached in 2010.

• Auto loan debt increased to $1.21 trillion in the third quarter

View the complete quarterly report on the Fed’s website.

Originally posted by ACA NEWS