Total consumer credit outstanding
increased by 5.5% ($16.0 billion) over the month in October to over $3.5
trillion (seasonally adjusted, annualized rate). Over the 12 months ending in
October, total non-mortgage consumer debt was up by 7.0%.
After posting a gain of 8.7% in September, the second highest monthly increase in 12 months, revolving credit was flat in October. Revolving credit, which is composed primarily of credit card debt, increased by 4.4% over the year, but remains nearly 10% below prerecession levels. Matching its average gain over the last 12 months, non-revolving credit (student and auto loans), rose by 7.4% or $15.8 billion to nearly $2.6 trillion. Over the year, borrowing for student and car loans has increased by 7.9%.
Set against a backdrop of
lackluster wage gains, the increase in consumer borrowing has led to an
increase in the ratio of debt to disposable income. Climbing steadily over the
past two years, this ratio now stands at 25.8%. Households appear able to be
handling higher levels of consumer debt without too much trouble, perhaps
because fewer households have home mortgages. At $8.75 trillion, total mortgage
debt in the third quarter of this year was 12.4% below the peak reached 3Q2008.
Credit card delinquency rates improved slightly during the third quarter, while
delinquency rates on auto loans remained unchanged. On the other hand, student
loan delinquencies are rising: 11.6% of
student loans are now seriously delinquent or in default. And because so many
student loans are in deferment, this may be understating actual delinquency rates.
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