Americans are increasingly willing to take on credit card debt or to take out loans to buy cars or to go to college, but they're still shying away from the biggest category of consumer credit: home loans.
That is exactly the outcome that the Obama administration is trying to avoid in its push to expand mortgage credit to more families through the bailed-out companies Fannie Mae and Freddie Mac.
The Federal Reserve Bank reported Thursday morning that the level of overall household debt was basically flat in the second quarter of 2014, declining by $18 billion to $11.6 trillion.
But the overall headline conceals a significant divergence between mortgages and all other categories of consumer credit.
Non-housing debt increased by 2 percent, led by a $30 billion increase in auto loans, with student borrowing and credit card debt also rising steadily, according to the New York Fed's Quarterly Report on Household Debt and Credit. Those gains mirror the results from the Federal Reserve Board of Governors' latest report, which shows consumer credit growing at the fastest pace since the economic recovery began.
Home loans, on the other hand, actually slightly declined by $69 billion to $8 trillion. New mortgages for home purchases or refinancings fell to the lowest level since 2000.
That is a reflection of the housing market, still wounded from the 2008 subprime mortgage crisis, weakening throughout 2014, a development that has mystified economic policymakers at the Federal Reserve and elsewhere.
They and the Obama administration see a functioning housing sector as a key to a stronger overall recovery, part of the reason Obama's top housing regulator Mel Watt has moved to loosen credit standards for mortgages.
While the latest survey of loan officers performed by the Federal Reserve did show banks reporting that they were loosening credit terms for all kinds of home loans, mortgage standards remain tight relative even to the pre-bubble period.