NEW YORK (Reuters) - Total U.S. household debt rose slightly in the third quarter to a total of $11.7 trillion, according to a survey by the Federal Reserve Bank of New York, which pronounced the end of the crisis-era “deleveraging process.”
The increase of $78 billion from the previous quarter was driven by auto and student loans and credit card balances, and continues a general trend since the middle of last year. While household indebtedness is still 7.6 percent below its peak six years ago, when a financial crisis set off the worst recession in decades, economists said the survey pointed to increased confidence among Americans.
The report on household debt and credit showed that mortgages, the largest slice of debt, edged up by 0.4 percent. Mortgage originations rose a bit to $337 billion, well below historical norms, while auto loan originations hit the highest level since 2005 at $105 billion. Credit card limits rose by 0.9 percent from the previous quarter.
“In light of these data, it appears that the deleveraging period has come to an end and households are borrowing more,” New York Fed economist Wilbert van der Klaauw said in a statement.
Some 11 percent of student loans were 90-plus days delinquent or in default, the highest in the last three quarters, according to the New York Fed survey that draws from a nationally representative consumer credit sample. The share of mortgage balances that were delinquent eased slightly.
The report is “another step in the evolution toward more normal credit market functioning,” said Credit Suisse economist Dana Saporta. The “willingness of households to take on more debt at this juncture – particularly credit card debt - (is) a positive sign of confidence in future income prospects.”
Reporting by Jonathan Spicer; Editing by Chizu Nomiyama and Andre Grenon