Press Release
Decrease in Overall Debt Balance Continues Despite Rise in Non-Real Estate Debt
November 27, 2012

NEW YORK – In its latest Quarterly Report on Household Debt and Credit, the Federal Reserve Bank of New York announced that in the third quarter, non-real estate household debt jumped 2.3 percent to $2.7 trillion.  The increase was due to a boost in student loans ($42 billion), auto loans ($18 billion) and credit card balances ($2 billion). 

The Quarterly Report on Household Debt and Credit is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative random sample drawn from Equifax credit report data.  During the third quarter of 2012, total consumer indebtedness shrank $74 billion to $11.31 trillion, a 0.7 percent decrease from the previous quarter.  The reduction in overall debt is attributed to a decrease in mortgage debt ($120 billion) and home equity lines of credit ($16 billion), despite mortgage originations increasing for a fourth consecutive quarter.     

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

Outstanding student loan debt now stands at $956 billion, an increase of $42 billion since last quarter.  However, of the $42 billion, $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.1 As a result, the percent of student loan balances 90+ days delinquent increased to 11 percent this quarter.2 

Other highlights from the report include:

  • Outstanding auto loans ($768 billion) are the highest in nearly four years.
  • Auto loan balances increased for the sixth consecutive quarter. 
  • Mortgage debt at $8.03 trillion is at its lowest level since 2006.
  • Delinquency rates for mortgages decreased from 6.3 percent to 5.9 percent.
  • HELOC delinquency rates remain high by historical standards (4.9 percent).
  • New foreclosures are returning to their pre-crisis levels, as about 242,000 consumers had a new foreclosure added to their credit report, the lowest in nearly six years.
  • Mortgage originations, which we measure as the appearance of new mortgages on consumer credit reports, rose to $521 billion, the fourth consecutive quarterly increase.  

About the New York Fed’s Quarterly Report The New York Fed’s Quarterly Report on Household Debt and Credit provides unique data and insight into the credit conditions and activity of U.S. consumers. The report includes information on various aspects of consumer debt, including bankruptcies, total debt levels and composition of debt, new originations of installment loans, total balance by delinquency status, foreclosures and new delinquencies by loan type for the U.S. and select states.  The report is aimed at helping community groups, small businesses, state and local government agencies and the public to better understand, monitor and respond to trends in borrowing and indebtedness at the household level.  Sections of the report are presented as interactive graphs on the New York Fed’s Household Credit web page and the full report is available for download. 

1 As stated in the Technical Notes, statistics are based on credit report data on accounts that were updated within the last three months.  As a result, measurement of the student loan balance and delinquency rate may be impacted by occasional delays or gaps in the reporting of defaulted student loans.

2 As explained in a Liberty Street Economics blog post, these delinquency rates for student loans are likely to understate actual delinquency rates because almost half of these loans are currently in deferment, in grace periods or in forbearance and therefore temporarily not in the repayment cycle. This implies that among loans in the repayment cycle delinquency rates are roughly twice as high.

Related New York Fed Content
By continuing to use our site, you agree to our Terms of Use and Privacy Statement. You can learn more about how we use cookies by reviewing our Privacy Statement.   Close