Some interesting
trends reflected in changes to consumer debt components. And mortgage debt
continues its decline with refinancing generating a significant part of recent
mortgage activity volume.
Will these trends be
the ‘new normal’ for an extended period of time?
On the other hand,
government debt continues to climb at record speed with no end in sight!
In the Fed report on
household debt released yesterday, mortgage debt fell $120b, equity lines of
credit shrank $16b, student loan debt rose $42b, auto loans rose $18b, and
credit card balances rose $2b. As mortgage debt drops (through a combination of
pay downs and defaults), student loans and auto debt is taking some of its
place which will likely be an issue down the road. The Market Today ONLINE
Falling
Mortgage Balances Offset Rising Student, Auto, Credit-Card Debt
By Josh Mitchell
Americans cut their debt further in
the summer, with falling mortgage balances more than offsetting increases in other
types of borrowing, new data show.
Household debt — the money Americans
owe on home, auto and student loans, credit cards and other types of consumer
debt — fell by $74 billion in the third quarter to $11.31 trillion as of Sept.
30, the Federal Reserve Bank of New York said Tuesday.The drop reflected a
continued decline in mortgage debt, as some households paid down balances while
others lost their homes in foreclosure.
Americans have reduced their debts
by more than $2 trillion since household debt peaked in summer 2008, a process called deleveraging. Economists saythe
process will put households on a sounder financial footing in the long term,
though it has sapped consumer spending and slowed growth in the short term.
Some additional
information regarding delinquency trends for credit cards and student loans:
the fastest growing consumer loan component now has the highest level of
delinquency.
