U.S. consumers took on $119 billion in new auto loans in the second quarter, the Federal Reserve Bank of New York reported Thursday, pushing the total outstanding balance of auto loans above the $1 trillion mark.
But while auto loans jumped, other categories of borrowing slowed, and overall household debt grew just $2 billion in the quarter. Auto debt is the third largest category of consumer debt behind mortgages, at $8.12 trillion, and student loans, at $1.19 trillion.
Growth in borrowing for college, a major concern among lawmakers in recent months, appeared to have slowed in the quarter, with just $1 billion in net growth.
Meanwhile, housing-related debt shrunk, and delinquency rates for home loans and other kinds of debt improved. Just 95,000 people had foreclosures added to their credit reports, according to the New York Fed, the smallest number since it has been keeping track over the past 16 years.
The $55 billion decrease in mortgage debt, combined with falling delinquencies and foreclosures, reflects a housing market recovering from the subprime crisis and lenders demanding clean credit, according to the New York Fed.
“Persistently tight underwriting standards imply that new mortgages continue to be originated predominantly to the most creditworthy borrowers,” said Wilbert van der Klaauw, senior vice president at the regional Fed bank. “The low rates of delinquency and new foreclosures reflect the higher quality of outstanding mortgage debt and improved economic conditions.”
Federal regulators have tried to ease credit by lowering required down payments, reassuring banks that they won’t face penalties or lawsuits in the future if they make good loans, and cutting fees on government-backed mortgage guarantees. Despite those efforts, some analysts say that home loans remain too hard to get for some creditworthy families.
The New York Fed’s household credit report is a nationally representative sample taken from Equifax credit data. Other government sources show different debt totals. For example, the Federal Reserve Board of Governors’ data shows that total student debt is slightly higher, at $1.27 trillion.
