In what bodes well for US households and the economy, the US Federal Reserve revealed that total household debt for Americans is slowly heading south, a positive sign that debt holders are managing to reduce the debt they incurred during the boom years of the US economy.

Long Road Ahead

There is still, however, a long way to go. Hope can be found in the fact that consumers lowered their overall debt by $40 billion in the third quarter of 2011, but there is still a long road ahead as the debt still pending totals over $13 trillion dollars, still reminding us of the good old days when US consumers went on a collective borrowing binge. Where is the money still owed? Everywhere- from credit cards to car loans to mortgages.

Mortgages Reach Five-Year Low

Look at the bright side: the debt is going down, slowly but surely. Mortgages have shown the best improvement, reaching a five-year low during 2011’s third quarter. There are several factors pushing down mortgage debt, say the experts, including foreclosures, bankruptcies and a less than vigorous demand for houses. Banks are also lending a hand: burned from the subprime fire, the banks are hesitant, to say the least, to lend out their hard-earned dollars, creating a low-flow situation of mortgage credit.

“The process is still ongoing,” says Greg Daco, economist at IHS Global Insight. “The decline in home prices has reduced movement and activity in the housing market both on the selling side and on the buying side. People don’t want to sell because they’re waiting for prices to stabilize or go up, and people don’t want to buy because they’re waiting for prices to continue to fall.”