Debt, Delinquencies Generally Decrease But Student Loans Problematic, Report Says

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By Stephen Joyce

U.S. consumers slightly reduced their indebtedness in the second quarter of 2013, but foreclosures rose and student loan indebtedness and payment delinquencies increased during the period, as did bankruptcy notations on credit reports, the Federal Reserve Bank of New York said in its quarterly report on household credit released Aug. 14.

Overall, indebtedness and payment delinquencies associated with U.S. consumers declined during the second quarter. Aggregate debt was reduced by about $78 billion to $11.15 trillion. Report data on student loan and foreclosures, however, were not as positive.

Mortgages accounted for $7.84 trillion of debt in the second quarter, or 71 percent of total consumer indebtedness. Home equity revolving loans accounted for 5 percent of all outstanding debt as of June 30, the report said.

Residents of California, on a per capita basis, had the highest rate of indebtedness in the nation. Residents of New Jersey and Nevada had the second and third highest debt load on a per capita basis, respectively, the report said. And Nevada, Florida, New Jersey, New York, and Illinois, had the five highest percentages of mortgage debt 90 days or more delinquent as of June 30, the report said.

The New York Fed household credit reports provide a quarterly snapshot of household trends in borrowing and indebtedness and include mortgage, student loan, credit card, auto loan, and delinquency data. 

Increase in Bankruptcy Notations

A total of 380,020 consumers had bankruptcy notations added to their credit reports in the second quarter of 2013, an 18.6 percent jump from the first quarter of 2013, but a 4.7 percent decrease compared with the second quarter of 2012 level of 398,980. 

Foreclosures Trend Lower

New foreclosures in the second quarter totaled 199,630, an increase compared with the first quarter but a 21 percent decrease compared with the second quarter of 2012 and a 65 percent decrease compared with the second quarter of 2008, when 566,380 foreclosures were recorded, New York Fed data showed.

Delinquency rates generally improved. As of June 30, 7.6 percent of outstanding debt was in some stage of delinquency compared with 8.1 percent in the first quarter.

All told, $179.97 billion was 30 days or more delinquent as of June 30, a decrease from $183.28 billion in the first quarter and down from $205.32 billion in the second quarter of 2012 and $409.74 billion in the fourth quarter of 2008, according to New York Fed data. 

Student Debt

Student loan indebtedness was the second leading category of debt during the quarter, trailing only mortgages. Student indebtedness totaled $994 billion and accounted for 9 percent of all outstanding debt, a greater percentage of outstanding debt than auto loans ($814 billion, 7 percent) or credit cards ($668 billion, 6 percent), the report said.

Fully 10.9 percent of students loans were 90 days or more delinquent in the second quarter; a total of 9.99 percent credit card loans, by comparison, were 90 days or more delinquent during the period, the report said.

Students borrowed another $8 billion during the second quarter, the report said.

Consumer debt peaked in the third quarter of 2008 at $12.68 trillion.

The report is available at

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