Consumers reduce debt, but household net worth down

Residential mortgage debt and household debt declined during the third quarter, according to the Federal Reserve.

Home mortgage debt fell at an annual rate of 1 3?4 percent in the third quarter, slightly less of a decline than in the first half of the year, according to the Fed’s massive flow of funds report.

The report showed households had 38.7 percent of their equity in their homes, down just slightly from 38.8 percent in the second quarter but down more than 30 percent from the 2006 housing peak.

Household net worth – the difference between the value of assets and liabilities – was $57.4 trillion at the end of the third quarter, down 4.1 percent or $2.4 trillion less than at the end of the second quarter. Declines in the value of stocks and mutual funds was partly to blame.