The non-real estate household debt rose 2.3% to $2.7 trillion for the third quarter, according to the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit.

The reduction is a result of a decrease in mortgage debt to $120 billion and home equity lines of credit to $16 billion, despite mortgage originations increase for the fourth consecutive quarter.

"The increase in mortgage originations, auto loans and credit card balances suggests that consumers are slowly gaining confidence in their financial position," said senior economist Donghoon Lee at the New York Fed.  

He added, "As consumers feel more comfortable, they may start to make purchases that were previously delayed."   

Mortgage debt is at its lowest levels since 2006, at $8.03 trillion. Delinquency rates for mortgages also decreased from 6.3% to 5.9%. 

Home equity line of credit delinquency rates remain at records highs of 4.9%.

About 242,000 consumers had a new foreclosure added to their credit report, which is the lowest is almost six years, indicating new foreclosures are returning to pre-crisis levels. 

Mortgage originations – measured as the appearance of new mortgages on consumer credit reports – rose $521 billion, which is the fourth consecutive quarterly increase.

The report is based on date from the New York Fed’s Consumer Credit Panel, drawn from Equifax credit report data.

The increase was due to an increase in student loans to $42 billion, auto loans to $18 billion and in credit card balances to $2 billion.

Total consumer indebtedness decreased 0.7% from last quarter, shrinking $74 billion to $11.31 trillion.

cmlynski@housingwire.com