The second quarter of 2011 showed evidence of a modest increase in availability of credit offered by banks and willingness of consumers to borrower.

According to the quarterly Household Debt and Credit Report for the second quarter of 2011, released by the Federal Reserve Bank of New York, the positive signs were the result of small decreases in the amount of outstanding credit held by consumers.

Mortgage and home equity lines of credit balances fell by $20 billion each.  Non-real estate debt fell by $10 billion, 0.04%, with the balances totaling $2.28 trillion.  This is 9.5% below the peak from the fourth quarter of 2008.

New credit inquires, a key indicator of demand tracked by the report, bounced back to positive territory after falling in the first quarter.  The number of open mortgage accounts held steady as the the number of open credit card accounts jumped by $10 million to $389 million.

Delinquency rates declined in the quarter to remain 15% below levels from the same time last year.  New foreclosures continued to decline, falling by 22.8% from the first quarter.  New bankruptcies were also down, a reduction of 23.8% from the second quarter of 2010.

"Outstanding consumer debt remained essentially flat, down just $50 billion, in what was basically a repeat of the previous quarter. This is more evidence that the pace of consumer deleveraging that began in late 2008 has slowed," said Andrew Haughwout, vice president in the Research and Statistics Group at the New York Fed. "During the next few quarters we will gain a better understanding of whether this is a permanent or temporary break in the decline of total outstanding consumer debt."