NY Fed Reports Q3 Declines in Consumer Debt, Delinquency Rates, Foreclosures and Bankruptcies

Some highlights from the NY Fed's quarterly report on "Household Debt and Credit," released today with third quarter updates:

1.  Aggregate consumer debt continued to decline in the third quarter, continuing its trend of the previous seven quarters. As of September 30, total consumer indebtedness was $11.6 trillion, a reduction of $922 billion (7.4%, and almost $1 trillion) from its peak level at the close of 2008Q3.

2.  Total household delinquency rates declined for the second consecutive quarter in 2010Q3. As of September 30, 11.1% of outstanding debt was in some stage of delinquency, compared to 11.4% on June 30, and 11.6% a year ago. Compared to a year ago, delinquent balances are down 8.2%, and serious delinquencies have fallen 4.6%.

3. About 457,000 individuals received home foreclosure notices on their credit reports between July 1 and September 30, 2010, a 5.5 percent decrease from the second quarter and a 6.4 percent drop from a year earlier.

4. The number of new bankruptcies noted on credit reports fell 16 percent from the previous quarter (from 621,000 to 522,000), but is 1 percent higher from a year earlier.

5. The proportion of current mortgage balances that transitioned into delinquency rose slightly from 2.6 percent to 2.7 percent, after about a year of decline. Given the similar pattern observed in the third quarter of 2009, one might suggest this is a seasonal effect.

MP: Except for the slight, seasonal  uptick in mortgage delinquencies, there are a number of positive trends reported for household debt and credit in Q3 that provide further evidence of an economy that is gradually recovering.