Americans of all stripes continued to get their finances in order during the period between April and June, as instances of delinquency and the total amount owed to lenders both took tumbles.
The second quarter of the year saw consumers nationwide cut their overall debts and make more payments into those they still had outstanding on time and in full, according to the latest Quarterly Report on Household Debt and Credit issued by the Federal Reserve Bank of New York. During that time, the total amount of household debt outstanding across the country fell $53 billion from the first quarter of the year, to $11.38 trillion in all. Now, the amount owed on all outstanding balances is down $1.3 trillion from the all-time peak observed in the third quarter of 2008.
This change was led largely by declines in debt related to real estate, such as mortgages and home equity lines of credit, the report said. Mortgage debt fell to $8.1 trillion from $8.2 trillion during the quarter, while HELOC stands at just $600 billion or so, having fallen roughly $23 billion.
Meanwhile, delinquencies for mortgages, credit cards and car loans all fell during this time, the report said. The lowest delinquency rate of these three types of credit belongs to auto financing at 4.2 percent, while mortgage delinquency stands at 6.3 percent. Late payments on credit cards make up 10.9 percent of all outstanding balances, but that's the lowest level observed since the fourth quarter of 2008.
"The continuing decrease in delinquency rates suggests that consumers are managing their debts better," said Wilbert van Der Klaauw, vice president and economist at the New York Fed. "As they continue to pay down debt and take advantage of low interest rates, Americans are moving forward with rebalancing their household finances."
However, student loans continue to be problematic for consumers, as delinquency and balances rose in the second quarter, the report said. The reported rate of late payments was 8.9 percent, but the Fed believes this is underreported due to about half of all outstanding student financing balances being technically in deferment. Further, balances on this type of credit climbed $10 billion to a total of $914 billion.
Many consumers have been reluctant to deal with more debt since the end of the recession, but many may see education financing as a necessary part of their lives.