Consumer debt posts highest increase since 2008 in third quarter

DebtRecent data released by the Federal Reserve Bank of New York showed consumer debt increased by $127 billion in the third quarter—the largest increase since the beginning of 2008.

Consumer indebtedness rose 1.1 percent from the second quarter to reach $11.3 trillion, though it remains 11 percent below its peak of $12.7 trillion in the third quarter of 2008.

Mortgages, which account for most household debt, rose by 0.7 percent in the third quarter to $7.9 trillion—up $56 billion from the second quarter. Foreclosures have been on the decline since 2009 and in the third quarter reached the lowest level seen since the end of 2005.

Non-housing debt rose 2.7 percent in the third quarter. Auto loan balances rose $31 billion, with total originations reaching $97.4 billion—the highest level since 2007. Student loan debt rose $33 billion to reach $1.03 trillion, and credit card debt increased $4 billion.

Delinquency rates, however, improved for most loan types in the third quarter, falling to 7.4 percent compared to 7.6 percent in the second quarter. Approximately $830 billion in debt is delinquent, $600 billion of which is 90 days or more delinquent.

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