Auto Loans, Mortgages Drive U.S. Household Debt Level to 5-Year High

Total household indebtedness jumped by $212 billion in the third quarter of this year, compared to the second quarter, reaching its highest level since 2010.

The growth was driven primarily by a $144 billion increase in mortgage balances. Meanwhile, auto loan balances increased for the 18th straight quarter, this time by $39 billion, and stand at $1.05 trillion as of the end of September — surpassing $1 trillion for the first time.
The data on household debt is based on the Federal Reserve Bank of New York’s Consumer Credit Panel, a nationally representative sample of American families’ credit data drawn from anonymized Equifax credit data.
Mortgage originations increased to $502 billion, continuing an upward trend that began in the 2nd quarter of last year. Student loan and credit card balances increased by $13 and $11 billion, respectively, while balances on Home Equity Lines of Credit (HELOC) declined by $7 billion.
“The growth in auto loan balances and originations has been very robust,” said Donghoon Lee, Research Officer at the New York Fed. “Credit conditions have remained attractive for auto purchasers with both prime and subprime credit.”
Delinquency trends were mostly positive in the third quarter.
Foreclosures hit a new low in the 17-year history of the data. The share of mortgage balances 90 or more days delinquent dipped to 2.3 percent from 2.5 percent in the previous quarter. Moreover, 14 percent fewer consumers had a bankruptcy notation added to their credit reports in the third quarter of this year, compared to the same quarter in 2014.

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