Total consumer debt in the US rose in the fourth quarter, ending four years of declines as Americans borrowed more for education and car purchases and mortgage debt stabilised.
debt rose 0.3 per cent, or $31bn, to $11.34tn in the final three months
of 2012, the Federal Reserve Bank of New York said on Thursday.
have been in a long period of paying down debts after running them up
during the housing boom. Since outstanding credit peaked at $12.68tn in
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have cut about 10 per cent, or $1.3tn, from their debt load, mainly due
to modified or defaulted housing loans.
report “suggests that there’s a slowdown in household deleveraging, but
whether this is a turning point is something we’ll have to see over the
next few quarters”, said Wilbert van der Klaauw, senior vice-president
at the New York Fed.
end to deleveraging would be a boon to the economy, as consumer
spending accounts for about 70 per cent of US gross domestic product.
the past year there has been a steady increase in new mortgages and
auto loans, helped by low interest rates, more affordable home prices
and the need for many Americans to replace ageing cars. Auto loan
originations were back to levels last seen in 2007, before the crisis,
while new mortgages rose for a fifth straight quarter, reaching $553bn.
rates have also improved for mortgages, car loans and credit cards,
edging down to an overall 8.6 per cent in the fourth quarter from 8.9
per cent in the third quarter. Student loans were an exception, however,
with the rate of those delinquent on payments for 90 days or more
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residential debt was broadly flat at $8.6tn as fewer houses entered
foreclosure, mortgage originations rose and delinquent home equity loans
were written off.
of the housing sector, debt balances rose for a third-straight quarter.
Student loan debt rose $10bn to $966bn. Auto loans rose $15bn to $783bn
– the highest in almost four years. Credit card balances rose $5bn to
the year, non-housing debt was up $100bn to a record $2.75tn, led by
student loans, which since 2010 have become the largest source of
indebtedness for US consumers behind mortgages.
Student debt rose $92bn, or 11 per cent, and auto loans increased $50bn, or 7 per cent,knife sets over the year. Americans paid down credit card debt in 2012,Chefs Kitchen Knives however, decreasing balances by $25bn, or 4 per cent.
it is too soon to conclude that a trend has been established in which
households are beginning to increase their debts again, there are signs
that the four-year long contraction is slowing,” said James McAndrews,
executive vice-president of the New York Fed.
he warned that the $85bn in automatic spending cuts set to take effect
on Friday and higher payroll taxes that hit consumers’ paychecks in
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