A drop in mortgage debt has led to a nationwide decline in household debt.
Outstanding household debt in the U.S. dropped by $78bn in the second quarter, according to the Federal Reserve Bank of New York.
Mortgage debt fell $91bn from Q1, leading the way for a total household debt decrease of 0.7% quarter-over-quarter, according to the bank’s Household Debt and Credit Report. The percentage of mortgage debt 90 days delinquent or more declined from 5.4% in Q1 to 4.9% in Q2, the report stated.
“Although overall debt declined in the second quarter, households did increase non-housing debt, led by rising auto loan balances,” said Andrew Haughwout, vice president and research economist at the New York Fed. “Furthermore, households improved their overall delinquency rates for the seventh straight quarter, an encouraging sign going forward.”
Mortgage originations are also on the rise, according to the report. Originations rose to $589bn in Q2, the seventh consecutive quarterly increase.
Foreclosure notifications also increased in the second quarter. Two hundred thousand people had foreclosure notifications added to their credit reports – the first increase since the first quarter of 2012, but still 65% below the peak in 2009.