Mortgages, credit card balances, and home equity loans are all seeing lower rates of delinquency — meaning more borrowers are paying on time — even as overall debts went up slightly in the fourth quarter of last year, according to the Federal Reserve Bank of New York.
There's one big exception to this trend of borrowers keeping up with their payments: the ever-growing pile of auto and student debt. Student debts now add up to some $1.16 trillion in outstanding balances, outpacing any form of of non-home consumer debt. That amount grew by some $31 billion in the last three months of 2014, while overall consumer debts grew by $117 billion.
"Although we've seen an overall improvement in delinquency rates since the Great Recession, the increasing trend in student loan balances and delinquencies is concerning," said Donghoon Lee, a Federal Reserve researcher, in a statement attached to the New York Fed's latest report on consumer debt.
Up from 11.1% a year ago, 11.3% of student debt is three months or more delinquent, which is by far the highest share of delinquencies of any type of consumer debt (auto debt is 3.5% delinquent, an increase from 3.1% a year ago, while 7.3% of credit card debt is 90-plus days delinquent, down from 7.5% last year).
A group of Federal Reserve researchers said that mortgage delinquencies were likely still above their pre-financial crisis levels thanks to lengthy foreclosure processes in some states, while credit cart delinquencies "have been steadily improving, and are now at some of the lowest levels we've seen since the start of our data in 1999."
The delinquency rate for student loans, on the other hand, has been climbing since 2003, the researchers said. One reason, they said, is that student debt can't be reduced or eliminated in bankruptcy, so borrowers with debts too big to pay back see those balances grow continually, "creating an ever-increasing pool of delinquent debt." The researchers also said that new delinquencies have been ticking up for student borrowers.