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Delinquencies, Bankruptcies, Foreclosures Improve; Household Debt Still 6.5% Below Peak

DSNEWS - Brian Honea

Measures on delinquencies, foreclosures, and bankruptcies all improved in the first quarter of 2015, while overall household debt remained about 6.5 percent below its peak from seven years ago, according to the Federal Reserve Bank of New York's Household Debt and Credit Report released earlier this week.

The number of individuals who had a foreclosure notation added to their credit reports in Q1 was 112,000, the lowest total since 1999, while the number of consumers who had bankruptcies added to their credit reports dropped by 4 percent from Q4 to Q1 down to the lowest point since 2006. The percentage of consumers with outstanding debt in some stage of delinquency fell from 6.0 percent in Q4 to 5.7 percent in Q1.

"Tight standards on mortgage lending are reflected in both sluggish growth in housing debt as well as substantial reductions in mortgage delinquency and defaults," said Andrew Haughwout, SVP and economist at the New York Fed.

The aggregate household debt balance in the United States at the end of the first quarter of 2015 totaled $11.85 trillion, an increase of about 0.2 percent ($24 billion) from the start of the quarter, according to the New York Fed. Q1's aggregate household debt total was about 6.5 percent below the peak of $12.68 trillion, achieved in Q3 2008. Non-household debt increased from Q4 to Q1 by 0.7 percent driven by increases in student loan debt and auto loan debt of $32 billion and $13 billion, respectively.

A "negligible uptick" in mortgage balances, the largest component in household debt, is largely responsible for the slow growth in aggregate household debt. The cumulative total of mortgage balances in the United States stood at $8.17 trillion in Q1, about 69 percent of the nation's aggregate household debt. Home equity lines of credit (HELOC) balances were little changed from Q4 to Q1 at $510 billion, according to the New York Fed.

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