Household Debt Recedes with Mortgage, Credit Card Balances

In the first quarter of this year, mortgage originations increased, but total outstanding mortgage debt decreased, according to the ""Household Debt and Credit Report"":http://www.newyorkfed.org/householdcredit/index.html from the ""Federal Reserve Bank of New York."":http://www.newyorkfed.org/index.html Delinquencies also improved over the quarter while foreclosure notices declined, according to the report.

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Total household debt--including mortgages, credit card debt, student loans, and auto loans--declined 1 percent to $11.23 trillion. The two main drivers of the quarterly decline were abating mortgage and credit card debt. Household debt currently stands significantly below its 2008 peak of $12.68 trillion.

Mortgage debt continues to make up a majority of household debt, contributing $7.93 trillion to the nation's total household debt. This is down from $8.03 trillion in mortgage debt recorded in the previous quarter.

In the ""fourth quarter of 2012"":http://dsnews.comarticles/consumer-debt-rises-in-q4-mortgage-flattens-fed-2013-03-01, mortgage debt remained mostly unchanged, while total debt increased slightly.

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""After a temporary deceleration in the previous quarter, the data suggest that household deleveraging has resumed its previous trajectory,"" said Wilbert van der Klaauw, SVP and economist at the Fed.

Home equity lines of credit (HELOCs) also declined in the first quarter. An $11 billion decrease brought the total to $552 billion. Household debt reached a peak of $12.68 trillion in the third quarter of 2008.

Mortgage originations increased for the sixth quarter in a row, reaching $577 billion for the quarter.

Overall, about 8.1 percent of household debt is currently delinquent. This is down from 8.6 percent in the previous quarter.

Mortgage delinquencies declined to 5.4 percent during the first quarter from 5.6 percent in the previous quarter, and HELOC delinquencies declined from 3.5 percent to 3.2 percent over the first quarter.

The number of mortgages that fell into delinquent status during the first quarter declined from 1.8 percent in the fourth quarter of last year to 1.6 percent in the first quarter of this year.

At the same time, the rate of delinquent mortgages that rose out of delinquency and back to current status increased from 28 percent to 35 percent.

The number of households receiving foreclosure notices declined 12.5 percent over the first quarter of this year with a total of 184,000 new notices being doled out during the three-month period.

The Federal Reserve Bank of New York obtains its data from Equifax data.