Fewer Americans fell behind on their mortgages, credit cards and auto loans in the second quarter of 2012, the Federal Reserve Bank of New York said in its Quarterly Report on Household Debt and Credit.

Total household indebtedness also experienced a $53 billion drop from the first quarter, leaving Americans with $11.38 trillion in total household indebtedness. That figure is about $1.3 trillion below household debt totals from the third-quarter of 2008.

Meanwhile, the delinquency rate for mortgages in the second quarter hit 6.9%, while auto loans had a much smaller delinquency rate of 4.2%. Credit card delinquencies fell, but still remain slightly above 10%.

On the flip side, while Americans are faring better with more traditional lines of household and auto debt, student loan delinquencies and late payments on home equity lines of credit rose in 2Q.

Student debt delinquencies increased to 8.9% with student loan debt now sitting at $914 billion. Meanwhile, HELOC delinquencies edged up to 4.9%. 

The New York Fed Bank says mortgage debt is on the decline as more Americans refinance into favorable low-interest mortgages created by today’s low interest rate environment.

“The continuing decrease in delinquency rates suggests that consumers are managing their debts better,” said Wilbert van Der Klaauw, vice president and economist at the New York Fed.  “As they continue to pay down debt and take advantage of low interest rates, Americans are moving forward with rebalancing their household finances.” 

Only 256,000 consumers ended up with a foreclosure notation on their credit reports in 2Q, the lowest number recorded since mid-2007. At the same time, mortgage originations rose to $463 billion.


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