WASHINGTON (8/15/14)--Household debt across the nation dropped for the first time in a year in the second quarter, according to numbers released by the Federal Reserve Bank of New York.
The gap in borrowing, which fell by $18 billion between April and June to $11.63 trillion overall, was fueled by a 14-year low in new mortgage loans (The Wall Street Journal Aug. 14).
Total new loans, including refinancings and home sales, sank to $286 billion, the lowest total since 2000 and less than half of the $589 billion of debt issued last year at this time.
Auto lending, meanwhile, continues to thrive as total loan balances climbed for the 13th straight quarter, The Wall Street Journal reported.
Further, new-auto loans in the second quarter jumped to their highest level in eight years, with balances climbing by $30 billion to $8.09 trillion.
Though auto-loan delinquencies have remained low, however, analysts caution that lenders are loosening underwriting guidelines, which could lead to defaults down the road, The Wall Street Journal reported.
Subprime auto loans also have become popular of late, especially with auto-finance companies within car companies, and not necessarily at traditional financial institutions, according to The Journal.
Student loans have ballooned to $1.12 trillion, rising by $7 billion in the second quarter, The Journal said, while credit card debt increased by $10 billion up to $669 billion and seriously overdue debt levels in the United States fell to 4.5%, the lowest percentage since the housing crash.