Mortgage lending reverses yearlong trend

NY Fed: Mortgage debt increases $35 billion in third quarter

Mortgage originations reversed a four-quarter trend in the third quarter, rising for the first time in a year, according to the Quarterly Report on Household Debt and Credit from the Federal Reserve Bank of New York.

According to the NY Fed’s report, mortgage originations, measured by the appearances of new mortgage balances on consumer credit reports, increased slightly in the third quarter to $337 billion.

Although the total mortgage originations, which included refinances, rose for the first time in four quarters, the figure still remains low by historical standards, the NY Fed said in its report.

The NY Fed report also shows that the amount of mortgage debt held by households increased by $35 billion from the second quarter to the third quarter, rising to a total of $8.13 trillion. Mortgage debt is up $234 billion over the same time period last year.

Balances on home equity lines of credit dropped by $9 billion (1.7%) in the third quarter and now stand at $512 billion, the NY Fed said.

Additionally, approximately 113,000 individuals had a foreclosure action added to the credit reports between July 1 and Sept. 30, the report stated. But the Fed also stated that new foreclosures continue on a declining trend that stretches back to the second quarter of 2009 and is now at the lowest level in the period covered by the NY Fed’s data.

The NY Fed report also shows that the 90-day delinquency rate for mortgages fell in the third quarter, from 3.4% in the second quarter to 3.2% in the third quarter.

In total, the amount of household debt rose by $78 billion in the third quarter to a total of $11.71 trillion. Household debt is up $430 billion from the same time period last year.

Despite its rise, the total of household indebtedness remains $970 billion below the peak of $12.68 trillion reached in Q3 2008, the NY Fed said.

“Outstanding household debt, led by increases in auto loans, student loans and credit card balances, has steadily trended upward in recent quarters,” said Wilbert van der Klaauw, senior vice president and economist at the New York Fed.

“In light of these data, it appears that the deleveraging period has come to an end and households are borrowing more.”

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