Mortgage Debt Continues to Decline

July 2, 2012 (Chris Moore)

Americans shed more of their mortgage debt in the first quarter of 2012, continuing a pattern that started in the second quarter of 2008, while total household debt fell for the thirteenth consecutive quarter according to the Federal Reserve’s latest Flow of Funds Report.

Total outstanding household debt fell from a revised $12,930.0 billion in the fourth quarter of 2011 to $12919.2 billion in the first quarter of 2012, a decrease of 10.8 billion. Total household debt peaked in the second quarter of 2008 at $13,808.5 billion and has been on the decline ever since.

The decline in debt was led by a $71.7 billion decline in mortgage debt, the 12th consecutive month that Americans have reduced their mortgage debt.

Total mortgage debt fell 2.9 percent from the fourth quarter of 2011, falling from $9.819 trillion to $9.747 trillion. The last time that total mortgage debt was that low was in the third quarter of 2006 when total mortgage debt stood at $9.721 trillion. Household mortgage debt peaked at $10.628 trillion in the first quarter of 2008.

Households continued to take on new consumer debt, which includes auto loans and credit cards, by borrowing $36.2 billion more in the first quarter than they did in the fourth quarter of 2012, an increase of 1.4 percent. It’s the highest amount of debt consumers have taken on any one quarter since the fourth quarter of 2008.

Total outstanding consumer debt increased from $2.508 trillion in the fourth quarter of 2012 to $2.544 trillion by the end of the first quarter 2012. Consumer debt peaked in the second quarter of 2008 at $2.609 trillion and fell to a four year low in the fourth quarter of 2010 but has been on the rise every quarter since.

Household net worth, the difference between the value of assets and liabilities, was $62.9 trillion at the end of the first quarter of 2012, about $2.8 trillion more than at the end of the fourth quarter of 2011 and the highest since 2007.

Tags: Federal Reserve, Flow of Funds, mortgage debt, consumer debt, household debt

Source:
Federal Reserve