Households continue to deleverage, mortgage debt reaches 2006 level
Household debt fell at an annual rate of 0.6% in the second quarter, continuing a deleveraging movement began in 2009, according to data from the Federal Reserve. Home mortgage debt dropped at an annual rate of 2.5% in the second quarter, "about the same pace of decline as in the previous quarter," according to the Flow of Funds report. Total outstanding mortgages for households, which includes home equity of lines of credit and others secured under junior liens, was $9.9 trillion in the second quarter, the second straight period of drops. The total is nearly level with the $9.8 trillion measured in 2006. The government-sponsored enterprises have not met that pace. Outstanding mortgages held by Fannie Mae, Freddie Mac and the Federal Home Loan Banks totaled $588.8 billion in 2005. By the first quarter of 2010 that number had grown to $5.1 trillion and has remained above $5 trillion through the second quarter of 2011, according to the Fed data. In August, a study from the Federal Reserve Bank of Cleveland showed households were deleveraging at a rapid pace since the financial crisis of 2008. Household debt burdens, according to their study, are heading toward a 20-year low. Write to Jon Prior. Follow him on Twitter @JonAPrior.