(Corrects amount of debt decline in fourth paragraph.)
Household debt in the U.S. declined 0.5 percent in the second quarter, led by a drop in debt tied to real estate, according to the Federal Reserve Bank of New York.
Consumer indebtedness shrank by $53 billion from the first quarter to $11.38 trillion as of the end of June, according to the quarterly report on household debt and credit released today by the district bank. Delinquency rates for mortgages, credit cards and car loans declined, while rates for student loans and home equity lines of credit rose, the report said.
“The continuing decrease in delinquency rates suggests that consumers are managing their debts better,” Wilbert van Der Klaauw, a vice president and economist at the New York Fed, said in a statement today. “As they continue to pay down debt and take advantage of low interest rates, Americans are moving forward with rebalancing their household finances.”
Americans have cut household debt by $1.3 trillion since the peak in the third quarter 2008 amid signs of a rebound in the housing market at the center of the 18-month recession that ended in June 2009, according to the report. The lowest mortgage rates on record helped boost the S&P/Case-Shiller gauge of home prices in 20 U.S. cities, which rose 0.5 percent in June from a year earlier for the first gain since September 2010.
About 256,000 consumers showed new foreclosures on their credit reports in the second quarter, a decrease of 12 percent since the first quarter and the lowest level since 2007, the New York Fed’s survey showed. About 399,000 consumers had a bankruptcy notation added to their credit reports, down 16 percent from the same quarter a year earlier, the report said.
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