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Household debt declines, student debt edges up

Americans are showing signs of cutting back on real estate debt, while other types of debt are creeping up slowly on their balance sheets.

Aggregate consumer debt hit $11.53 trillion in the fourth quarter, down $126 billion from $11.66 trillion in quarter three, a report from the Federal Reserve Bank of New York said Monday.

The report says real estate-related consumer debt declined as student loan debt ticked up nationally, suggesting more Americans are shedding certain kinds of consumer debt while taking out more loans for education.  

Areas of consumer debt seeing a decline include real estate debt, with balances on mortgage and home equity lines of credit falling by $146 billion, according to the Federal Bank quarterly report on household debt and credit.

During the quarter, student loan indebtedness grew slightly to $867 billion. Overall, non-real estate indebtedness rose by $20 billion during the fourth quarter.

In addition, total household delinquency rates started to fall in 4Q after picking up in the third quarter. The study said $1.12 trillion of consumer debt is now delinquent with $824 billion now classified as seriously delinquent. In addition, about 2.2% of mortgage balances moved into delinquency during 4Q. 

"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."

Even though some mortgage-related debts fell, 289,000 people still had foreclosures added to their credit reports in the fourth quarter, the report said. That is up 9.5% from the third quarter of 2011.

The report added that, "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."

 kpanchuk@housingwire.com

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