Press Release
Delinquent Debt Shrinks while Real Estate Debt Continues
to Fall
February 27, 2012
NEW YORK—Aggregate consumer debt fell $126 billion to $11.53 trillion in the fourth quarter of 2011 according to the Federal Reserve Bank of New York’s latest Quarterly Report on Household Debt and Credit, a 1.1 percent decrease from the $11.66 trillion reported in the prior quarter’s findings. The report, which includes data on a variety of household debt levels, also revealed further declines in real estate debt and delinquencies, while showing that other forms of consumer indebtedness increased.

Mortgage and home equity lines of credit (HELOC) balances fell a combined $146 billion, a sign that consumers continue to reduce housing related debt.

After a mild uptick in the third quarter, total household delinquency rates resumed their downward trend in the fourth quarter. The report finds that $1.12 trillion of consumer debt (or 9.8 percent of outstanding debt) is currently delinquent, with $824 billion seriously delinquent (at least 90 days late). Meanwhile about 2.2 percent of mortgage balances transitioned into delinquency during the fourth quarter, resuming the recent trend of reductions in this measure. However, delinquency rates remain elevated compared to historical figures.

"While we continue to see improvements in the delinquent balances and delinquency transition rates this quarter, there has been a noticeable decrease in the rate of improvement compared to 2009-2010," said Andrew Haughwout, vice president and economist at the New York Fed. "Overall it appears that delinquency rates are stabilizing at levels that remain significantly higher than pre-crisis levels."

Other highlights from the report include:

  • Mortgage and HELOC balances on consumer credit reports fell $134 billion (1.6 percent) and $12 billion (1.9 percent) respectively.
  • Non-real estate indebtedness rose $20 billion (0.8 percent) during the quarter, resuming a trend of increases.
  • Aggregate credit card limits rose by $98 billion (3.6 percent), resuming the trend of increases observed in the first half of the year.
    • Open credit card accounts increased by 3 million to 386 million.
  • Credit account inquiries within six months, an indicator of consumer credit demand, increased (2.7 percent) for the third quarter in a row.
  • Roughly 289,000 individuals had a foreclosure notation added to their credit report in Q4, a
    9.5 percent increase from the third quarter.
  • Student loan indebtedness increased slightly, to $867 billion.

Overall in 2011, the data show a continued decline in household debt driven by reductions in real estate-related debt, as well as a continued but slowing decline in delinquency, bankruptcy and foreclosure rates. Credit account inquiries and openings suggest an increased interest by consumers in obtaining access to credit. Also, in 2011, mortgage originations totaled $1.55 trillion, the lowest level of originations since 2000. However, auto loan originations in 2011 totaled $289 billion, the highest amount since 2007.

About the New York Fed’s Quarterly Report on Household Debt and Credit
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, which is updated quarterly, includes information on various aspects of consumer debt, including bankruptcies, per capita debt levels, 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. The report is based on data from the New York Fed’s Consumer Credit Panel, which represents a nationally representative random sample drawn from Equifax credit report data. 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.

Media Contacts:
Matthew Ward
(212) 720-6885
matthew.ward@ny.frb.org

Andrea Priest
(212) 720-6139
andrea.priest@ny.frb.org

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