Household debt rose in the latest quarter by the most in more than five years and the share of student loans in delinquency hit a record high, data from the Federal Reserve Bank of New York showed on Thursday.
Total consumer debt rose 1.1 percent to $11.28 trillion in the third quarter, the New York Fed said in its quarterly household debt and credit report. That marked the biggest quarterly jump since the first three months of 2008.
Americans have consistently deleveraged in the years since the housing collapse and financial crisis, and credit is well below the peak of $12.68 trillion in the third quarter of 2008.
The latest increase suggests, however, that the deleveraging cycle may be nearing its end. Americans boosted credit card balances, borrowed more to buy homes and cars and took on more student debt.
"This quarter we observed an increase of household balances across essentially all types of debt," Donghoon Lee, senior New York Fed research economist, said in a statement. "With non-housing debt consistently increasing and the factors pushing down mortgage balances waning, it appears that households have crossed a turning point in the deleveraging cycle."
The continued rise in student debt could be a cause for concern. Outstanding balances rose $33 billion to $1.03 trillion in the third quarter. A record 11.8 percent of loans were behind by 90 days or more, the New York Fed said, up from 10.9 percent in the second quarter.
Student debt cannot be discharged under current bankruptcy law, and economists worry that delinquencies can lock people out of economic participation.
"Being delinquent hurts one's credit rating, making it harder to buy a house and generally participate in a credit-driven economy," said Michael Hanson, U.S. economist at Bank of America Merrill Lynch.
"But it's hard to know how systemic a risk this is," he said, noting the amounts on delinquent loans can vary widely.
Auto loan balances jumped by $31 billion, the 10th straight quarterly increase, and new loan originations increased to $97.4 billion, the highest since the third quarter of 2007, reflecting a rebound in a key sector of the U.S. economy.
Overall household delinquency rates dropped to 7.4 percent in the three months to September from 7.6 percent in the second quarter, extending a post-recession trend.
The report also showed outstanding mortgage balances rose by $56 billion to $7.9 trillion, while 1.6 percent of existing mortgages fell into delinquency, up from 1.5 percent the prior quarter. Mortgages are the largest segment of consumer debt.
Foreclosures, which have been declining since the second quarter of 2009, hit their lowest levels since the end of 2005.
Meanwhile, lenders made slightly fewer mortgages with originations slipping to $549 billion from $589 billion.
Elsewhere, credit card balances edged up by $4 billion, while the number of credit account inquiries over six months - an indicator of consumer credit demand - rose to 168 million from 159 million the prior quarter.