American households continued to pay off debt in the second quarter, although at a slower pace than before, CNNMoney.com said today after the release of a regional Federal Reserve report.
The Federal Reserve Bank of New York said in its Quarterly Report on Household Debt and Credit that nearly $1 trillion has been shaved from outstanding consumer debt since its peak in the third quarter of 2008.
Total consumer debt was $11.6 trillion as of Sept. 30, down 7.4 percent, or $922 billion, from 2008. Consumer indebtedness fell another 0.3 percent in the third quarter after a 3.3 percent decline in the prior quarter.
In addition, total household delinquency rates fell for the second consecutive quarter. The report said 11.1 percent of outstanding debt was in some stage of delinquency at the end of September, compared with 11.4 percent on June 30 and 11.6 percent a year earlier.
About 457,000 homes went into foreclosure in the third quarter, a 5.5 percent decrease from the number of new foreclosures in the second quarter of this year. Bankruptcies also fell 16 percent from the previous quarter.
Excluding the effects of defaults, non-mortgage debt fell for the first time since 2000, according to the report. Also, mortgage debt paydowns, which began in 2008, reached nearly $140 billion by the end of 2009.
The number of open credit card accounts fell 24 percent from their peak in 2008.
“Americans are borrowing less and paying off more debt than in the recent past. This change, which we continue to study carefully, can be a result of both tightening credit standards and voluntary changes in saving behavior,” Donghoon Lee, a senior economist at the New York Federal Reserve said in a statement.
At the state level, Arizona, California, Florida and Nevada continued to post higher delinquency and foreclosure rates than the nation as a whole.