The Federal Reserve issued the quarterly consumer credit report late yesterday. The four-year downtrend in aggregate consumer debt continued, falling another $74 bln in Q3 to $11.31 trillion. This is a 0.7% decline over the quarter. At the end of Q3, US consumer debt was $1.37 trillion below the peak in Q3 2008.
Mortgage debt is the largest component. It fell 0.15% on the quarter to $8.03 trillion, which is the lowest since 2006. However, the bulk of the reduction of mortgage debt may be over. New mortgage debt rose 2.3%, while home equity debt continued to fall (-2.%). Rising home prices, increase in residential investment, coupled with a mutli-year high in consumer confidence, warns that mortgage debt may begin growing again.
Non-mortgage debt increased. Auto loans increased by $18 bln in Q3, the sixth consecutive quarterly increase and at $768 bln, it stands a a 2-year high. Student loans increased by $42 bln. While the delinquency rate of mortgages has fell (5.9% from 6.3%), student loans in arrears have increased. Credit card debt rose by $2 bln.