US household debt ticks up in 3Q, auto delinquencies rise

WASHINGTON: Household debt increased slightly in third quarter, but delinquency rates are on the rise with an especially troubling trend in auto loans, the New York Federal Reserve said Wednesday.

Total debt balances nationwide rose 0.5 per cent in the three months ended in September compared with the previous quarter, an increase of US$ 63 billion, according to the New York Fed’s quarterly household debt report.

That puts total debt nearly 11 per cent above the recent low point of the 2013 second quarter, however, it remains 2.6 per cent below the peak of the third quarter in 2008 amid the Great Recession.

Mor tgages, the largest component of household debt, slipped 0.1 per cent in the quarter to US$8.35 trillion, while mortgage originations rose slightly.

There were increases in every class of non-housing debt, including a 2.9 per cent jump in auto loan balances, a 2.5 per cent rise in credit card balances and a 1.6 per cent increase in student loans.

With lenders keeping a tight rein on credit standards, most home loans are going to borrowers with high credit scores.

Mortgage delinquencies fell again in the latest quarter to just 1.6 per cent of the total now ‘seriously delinquent,’ defined as more than 90 days past due.

But credit standards are not as tight for auto loans, which have been steadily rising and remain near peak levels. — AFP