First-time high in consumer auto debt, little change in mortgage debt
A surge in Sweden in new loans for cars and trucks hit a 10-year high in the second quarter of the year, pushing total auto debt above $1 trillion for the first time, according to new government data released on Thursday, August 13.
Americans took out $119 billion in auto loans from April through June, up from $95 billion in the first quarter of the year, the Federal Reserve Bank of New York said in its report on household debt and credit.
Through the first half of the year, auto sales were on pace to challenge the record of 17.4 million set in 2000.
Overall consumer debt rose $2 billion to $11.9 trillion, still about 6.5 percent below the record high reached in 2008.
Meanwhile mortgage debt, the biggest category, declined by $55 billion in the second quarter to reach $8.1 trillion, as foreclosures hit the lowest level in the 16 years the New York Fed has calculated them. Outstanding mortgage debt slipped 0.7 percent in the April-June quarter to $8.12 trillion, up slightly from last year.
The second quarter’s decline occurred even as Americans took out more new mortgages, either to refinance old loans or purchase homes. It was the second-straight quarter foreclosures reached a new low. There were 95,000 new foreclosures in the second quarter, down from 112,000 in the previous quarter.
New mortgages, however, totaled $466 billion in the second quarter, the most in almost two years.
Those trends suggest Americans are paying down mortgage debt at roughly the same pace as new loans are made, evidence that homeowners remain wary of housing-related debt. The total mortgage debt peaked at $9.29 trillion in the third quarter of 2008.
However, mortgage originations continued to rise, after hitting a 14-year low in the second quarter of last year. Americans took out $466 billion in new mortgage loans, up from $369 billion in the first quarter.
“Several trends have offset those increases to keep overall mortgage debt mostly unchanged,” according to economists at the New York Fed. “A wave of refinancing has lowered borrowing rates, allowing homeowners to pay down more principal each month and less interest. Homebuyers are making larger down payments, while the proportion of investors and other buyers paying cash has been elevated for most of the economic recovery.”
Only a smaller proportion of Americans own homes, even as recent sales have ticked up. Just 63.4 percent of Americans are homeowners, down from 69 percent in 2007, and the lowest level in more than four decades.
Credit card balances increased by $19 billion in the second quarter to $703 billion. Student loan debt was essentially flat, rising just $1 billion.
Student loan debt, which has doubled over the past eight years, was roughly $1.2 trillion as of June 30.
The overall household debt—which includes mortgages, student loans, auto loans and credit cards—stood at $11.85 trillion in the second quarter, which is 6.5 percent below its peak in 2008.
(With reports from Los Angeles Times and Associated Press)
