NY follows national trends on debt, according to Fed data

Residents of New York State weren’t immune to national trends when it came to handling debt at the beginning of this year, a recent report from the Federal Reserve Bank of New York shows. 

The New York Fed’s Quarterly Report on Household Debt and Credit, released May 31, found that the total debt balance for the nation declined slightly in the first quarter of 2012. Total debt balance dropped from $11.54 trillion in the fourth quarter of 2011 to $11.44 trillion in this year’s first three months.

New Yorkers followed suit, according to the report’s measurements of debt by state, expressed on a per capita basis. Per capita debt in New York fell from $49,570 to $49,440.

The debt drawdown may not be solely the result of consumers choosing to pay off loans or eschewing further borrowing, according to Wilbert van der Klaauw, vice president of the microeconomic studies function at the New York Fed and co-author of the quarterly debt report.

“There’s a question of how much of consumers’ debt pay down is voluntary or the product of tightened credit standards,” he said in an email. “It’s more difficult now to take out home-equity lines of credit or second liens.”

Still, van der Klaauw conceded that consumers are working to reduce debt on a national level.

“Our research suggests that while tightened lending standards have played a major role in declining liabilities of the household sector, consumer-initiated reductions in debt have contributed as well,” he said.

Nationally, mortgages made up the largest portion of consumer debt — $8.2 trillion. Student loans were next at $904 billion, followed by auto loans at $737 billion, credit cards at $679 billion, and revolving home equity at $612 billion. Other forms of debt accounted for $319 billion.

New York State residents also had a majority of their debt in mortgages. Per-capita mortgage debt in the state was $34,050 in the first quarter of 2012.

Student loans were the next-highest source of debt in the state at $4,610 per capita. Revolving home equity slotted in below that at $3,780 per capita, followed by credit cards at $3,320, auto loans at $2,670, and other forms of debt at $1,010.

The New York Fed highlighted student-loan debt in this month’s report. Nationwide, student-loan debt reported on consumer credit reports increased by $30 billion from the end of 2011 to $904 billion in the first quarter of this year.

It is not yet clear how ballooning student debt will affect young consumers’ spending habits, van der Klaauw said.

“In terms of their future ability to spend and to buy homes, outstanding student loan debt can have some effect,” he said. “We don’t know enough about how big that impact will be. Those who have delinquent student loans will see their credit scores affected.”

Nationally, the percentage of student loans that were delinquent for 90 or more days increased in the first quarter of 2012. It rose to 8.69 percent, from 8.45 percent the previous quarter.

However, delinquencies of 90 or more days for all other forms of debt fell slightly. Auto loans and “other” forms of debt tied for the largest decline, 0.27 percentage points. Auto loans fell from 4.82 percent delinquent for 90 days or more to 4.55 percent, while “other” delinquencies slipped from 10.51 percent to 10.24 percent.

For all forms of debt combined, the portion of loans delinquent for 90 or more days fell from 7.14 percent to 6.96 percent.

“Delinquency rates are coming down on most forms of debt,” van der Klaauw said. “Bankruptcies and foreclosures are coming down a little bit overall. Overall, those numbers are good.”