NEW YORK—In its latest Household Debt and Credit Report, the Federal Reserve Bank of New York announced that in the fourth quarter of 2012 outstanding consumer debt increased slightly ($31 billion), breaking the downward trend observed since the fourth quarter of 2008.  The increase was primarily due to a rise in non-housing debt and the stabilization of mortgage debt. 

Total consumer indebtedness was $11.34 trillion, 0.3 percent higher than the previous quarter but considerably lower than its peak of $12.68 trillion in the third quarter of 2008. While outstanding mortgage debt remained roughly flat, originations of new mortgages rose to $553 billion, a fifth consecutive quarterly increase. 

Non-housing debt balances increased for the third straight quarter and now stand at $2.75 trillion, up 1.3¹ percent in the fourth quarter.  All non-housing components increased; auto loans up $15 billion, student loans up $10 billion and credit cards up $5 billion. 

“The data provide early evidence that consumers may be reaching the end of the four year deleveraging cycle, though we’ll need to see if this is sustained in upcoming quarters,” said Andrew Haughwout, vice president and economist at the New York Fed. “At the same time, we observed mixed developments, mortgage originations increased and fewer accounts entered the foreclosure pipeline but delinquency rates remain considerably higher than pre-crisis levels.” 

Outstanding student loan debt now stands at $966 billion, an increase of $10 billion from last quarter.  The percent of student loan balances 90+ days delinquent increased again and currently stands at 11.7 percent.² 

The Quarterly Report is based ondata from the New York Fed’s Consumer Credit Panel, a nationally representative sample drawn from Equifax credit report data. 

Other highlights from the report include:

• 8.6 percent of total debt was in some stage of delinquency compared with 8.9 percent the previous quarter. 
• Outstanding auto loans ($783 billion) are the highest in nearly four years.
• Delinquency rates for mortgages improved to 5.6 percent from 5.9 percent the previous quarter.   
• Delinquency rates for home equity lines of credit, which stood at 4.9% in the third quarter, dropped to 3.5 percent; a decline primarily reflecting higher charge-offs of delinquent HELOCs this quarter.
• About 210,000 individuals had a new foreclosure notation added to their credit report, a quarterly slowdown of 13.3 percent, continuing a downward trend. 

About the report: The Federal Reserve Bank of New York’s Household Debt and Credit Report provides unique data and insight into the credit conditions and activity of U.S. consumers. Based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample drawn from Equifax credit report data, the report provides a quarterly snapshot of household trends in borrowing and indebtedness, including data about mortgages, student loans, credit cards, auto loans and delinquencies.  The report aims to help community groups, small businesses, state and local governments 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. 

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.