Fed Says Mortgages Push Household Debt to Highest Since 2010

Updated on
  • New York Fed releases quarterly household debt, credit report
  • Fed says total household indebtedness rises $212b to $12.07t

Accelerating increases in auto loan debt and mortgage credit helped propel total borrowings of U.S. households to the highest level in more than five years, the Federal Reserve Bank of New York said Thursday.

Household debt rose by 1.8 percent, or $212 billion, in the third quarter to $12.07 trillion, the most since the first quarter of 2010, according to the New York Fed’s quarterly report on household debt and credit.

The data chimed with other encouraging readings on the U.S. economy that have prodded the central bank to consider raising interest rates from near-zero, where they’ve been held for seven years. Minutes of the Fed’s October policy-setting meeting, released in Washington on Wednesday, showed officials leaning toward a hike next month.

Auto loan balances rose 11.9 percent from a year earlier to $1.05 trillion, reaching the highest level since the survey began in 1999.

Robust Demand

“The growth in auto loan balances and originations has been very robust,” New York Fed Research Officer Donghoon Lee said in a statement accompanying the release. “Credit conditions have remained attractive for auto purchasers with both prime and subprime credit.”

The level of overall household debt was 3 percent, or $355 billion, higher than a year ago in the third quarter of 2015, though it remains 4.9 percent below the peak of $12.68 trillion reached in the third quarter of 2008, the report showed.

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

Mortgage debt jumped 1.8 percent, or $144 billion, from the second quarter, according to the report. Mortgage originations increased to $502 billion from July to September.

Credit card debt rose 1.6 percent, or $11 billion, in the third quarter to $714 billion. Student loan balances increased 1.1 percent, or $13 billion, from the second quarter to a new high of $1.2 trillion. The share of student debt at least 90 days delinquent in the second quarter rose to 11.6 percent, the highest since the third quarter of 2013.

(Updates with more details in sixth paragraph.)
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