NY Fed: Consumer debt falls in 3rd quarter
Sales on existing homes fell to a rate that puts 2011 on track to be a very slow year for the real estate industry. The National Association of Realtors reported that a significant number of deals fell through when appraisals came back lower than the asking prices. (Nov. 28, 2011) Credit: Getty Images
U.S. consumer debt fell during the third quarter, pushed down by declines in mortgage balances, the New York Federal Reserve said Monday.
The report showed households continuing to shed debt and dig out from losses following the collapse of housing markets and the 2007-09 recession.
Total consumer credit slipped 0.6 percent, or $60 billion, to $11.66 trillion, according to the quarterly survey.
"The decline in outstanding consumer credit reveals that households continue to try and deleverage," or reduce their debt levels, "in the wake of a challenging economic environment and large declines in home values," said Andrew Haughwout, an economist in the New York Fed's research and statistics group.
Mortgage balances fell by 1.3 percent during the quarter, partially offsetting gains registered earlier in the year, the New York Fed said.
The number of credit card accounts fell by 6 million to 383 million, which is nearly 23 percent below its peak in the second quarter of 2008. But the number of credit account inquiries over six months -- an indicator of consumer credit demand -- continued to rise.
An exception to the trend of shrinking debt in the quarter was student loans. Such debt rose to $865 billion in the third quarter, from a sharply revised $845 billion in the second quarter.
The rapid rise in the cost of college has helped fuel an increase in student loan debt.
Auto loan and home equity balances also rose.
The data suggested households continue to struggle with debt payments.
Total household delinquency rates rose slightly in the quarter, while mortgage originations fell to the lowest level since mid-2000, the regional Fed bank said.
The number of mortgages falling into delinquency during the quarter rose, reversing a trend of declines.
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Out East with Doug Geed: Wine harvests, a fish market, baked treats and poinsettias NewsdayTV's Doug Geed visits two wineries and a fish market, and then it's time for holiday cheer, with a visit to a bakery and poinsettia greenhouses.
