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By Michael S. Derby

Feb 13 (Reuters) - Overall debt levels held by Americans rose modestly in the final quarter of last year on a healthy consumer sector, even as automobile borrowing faced some turbulence, the Federal Reserve Bank of New York said on Thursday.

“Consumers are in pretty good shape in terms of the household debt landscape, largely driven by stable balances and solid performance in mortgage loans,” the bank said in a posting detailing the findings on its latest report on the state of household debt, this time for the fourth quarter of 2024.

“However, for auto loans, higher car prices combined with higher interest rates have driven monthly payments upward and have put pressure on consumers across the income and credit score spectrum,” New York Fed economists wrote.

New York Fed researchers said that borrowing levels relative to income are pretty stable and still below levels seen before the COVID-19 pandemic, even as some sectors like car lending face some trouble. The bank’s borrowing data details conditions for an economy with solid growth and low unemployment, even as inflation pressures remain elevated and short-term interest rates are high. The Fed’s current monetary policy stance has increased borrowing costs broadly, most notably chilling activity in the housing market.

In the report, the bank said total household debt at the end of the year rose by 0.5% to $18.04 trillion. Overall debt levels are also up by $3.9 trillion since the end of 2019, before the onset of the pandemic.

Credit card balances rose $45 billion from the prior quarter to $1.21 trillion, while mortgage balances ticked up $11 billion to $12.61 trillion amid a rise in mortgage creation during the quarter. The report said that auto loan balances rose by $11 billion to $1.66 trillion versus the prior quarter.

The New York Fed report also detected some ongoing fraying on the credit front, with 3.6% of debt in some form of trouble during the quarter, up slightly from the prior quarter’s 3.5% rate. The report said debt moving into troubled status was steady across all borrowing types with the exception of credit cards, which saw a “small uptick” in the transition into delinquency.

Borrowing transitioning into serious delinquency, which means past due for three months or longer, “edged up” for auto loans, credit cards, home credit lines but was stable for mortgages, the report said.

The New York Fed report zeroed in on issues with lending for automobiles. There, issues with rising prices and high borrowing rates have hit borrowers differently at different income levels, notably for those who bought expensive used cars during the pandemic and who may be underwater on loans now.

But things may improve. “The decline in auto prices could imply that the more recently originated vintages of auto loans may fare better as those loans age,” New York Fed economists wrote.

More broadly, bank data showed that around 123,000 consumers had a bankruptcy notation added to their credit record, down from the third quarter. Consumers with a third—party collection noted on their credit record was “relatively stable” in the fourth quarter, the bank said.

(Reporting by Michael S. Derby; Editing by Andrea Ricci)

((Michael.Derby@thomsonreuters.com;))