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Higher debt, fewer delinquencies

By Judy Martel · Bankrate.com
Tuesday, May 13, 2014
Posted: 4 pm ET

Household debt -- driven by outstanding mortgages -- has been increasing for three quarters in a row, but delinquency rates are at their lowest level since 2008, according to the Federal Reserve Bank of New York.

steps-to-refinance-mortgage-lgOverall, household debt increased by $129 billion from fourth quarter last year, with $116 billion of that gain coming from mortgage debt. As of March 31, total household debt stood at $11.65 trillion; mortgage liabilities at $8.17 trillion. Total debt peaked in the third quarter of 2008 at $12.68 trillion.

Fewer new foreclosures

The good news from the New York Fed is that 12,000 fewer individuals had foreclosure notations added to their credit reports in the first quarter compared with the previous quarter.

New foreclosures have been dropping steadily since 2008 and at their lowest level since early 2003.

There was also a decline in mortgage delinquencies in the first quarter -- 3.7 percent of loans were more than 90 days overdue, compared with 3.9 percent in the previous quarter.

Mortgage originations are the crystal ball

Mortgage originations fell by $120 billion to $332 billion in the first quarter, the lowest level since third quarter 2011.

That's an important indicator of household financial health, Andy Haughwout, vice president and economist at the New York Fed, said in a news release, noting that "the direction of future mortgage originations will have an important implication on the household financial outlook and we will continue to monitor it."

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