NY Fed: U.S. household debt down 0.7% in 3Q

Household debt in the U.S. fell 0.7 percent during the third quarter as a decline in real-estate borrowing outpaced rising student and auto loans, according to a Federal Reserve Bank of New York survey.

Consumer indebtedness shrank by $74 billion to $11.31 trillion, according to a quarterly report on household debt and credit released Tuesday. Mortgage debt declined by $120 billion to $8.03 trillion, the lowest since 2006.

Home-equity lines of credit fell by $16 billion, even as mortgage originations increased for the fourth straight quarter.

"Consumers seeing their balance sheets recovering are getting more confident," said Yelena Shulyatyeva, U.S. economist at BNP Paribas SA in Manhattan. "People want to lower their debt, instead of putting it into consumption."

Americans have cut debt by $1.37 trillion from the peak in the third quarter of 2008, according to the New York Fed's data.

Borrowing outside of home financings climbed by 2.3 percent in the third quarter to $2.7 trillion as auto debt increased by $18 billion, student loans rose by $42 billion and credit-card balances grew by $2 billion, the survey showed.

"The increase in mortgage originations, auto loans and credit-card balances suggests that consumers are slowly gaining confidence in their financial position," Donghoon Lee, a senior economist at the New York Fed, said in a statement. "As consumers feel more comfortable, they may start to make purchases that were previously delayed."

-- Bloomberg News