With many Americans regaining their financial footing, they have been able to pay down their mortgage debt.
According to the Federal Reserve Bank of New York's Quarterly Report on Household Debt, mortgage debt declined $120 billion in the third quarter. Total mortgage debt now sits at $8.03 trillion, which is a six year low.
"Consumers seeing their balance sheets recovering are getting more confident," U.S. economist at BNP Paribas Yelena Shulyatyeva told Bloomberg. "Deleveraging is still a headwind because people want to lower their debt, instead of putting it into consumption."
The large decrease in mortgage debt outpaced increases in auto and student loan debt and credit card balances, which led to a 0.7 percent drop in overall household debt. Auto debt jumped $18 billion in the third quarter, while student loan debt was up $42 billion and credit card balances increased $2 billion.
Donghoon Lee, senior economist at the New York Fed, said that the bump in debt could signal increasing confidence among Americans in their financial standing. This could lead to many making the jump from renters to home buyers, as current mortgage rates making buying more affordable than ever for qualifying borrowers.