US Net Private Assets Abroad Decline Sharply, Consumer Loans Off Their Highs

US Net Private Assets declined sharply to a net of minus 290.2 billion dollars by October 1, 2004, after a figure of minus 137.9 billion dollars three months before. The figure comes close to the record of 296.4 billion dollars set at the beginning of 2004, according to data released by the Fed St. Louis. The last time when private assets showed a small net plus of 2.3 billion dollars was mid-2002.


The shift to mortgages based on rising property values gets reflected in consumer loans which declined about one percent to 704.7 billion dollars by the end of April 2005 from their record level of 711.4 billion reached a month earlier. This trend can be expected to accelerate once banks tighten their lending practice more after there have been reports that loan criteria have been getting handled quite lax recently. Consumers are also taking advantage of still very low mortgage rates which have encouraged them to refinance their consumer loans pawning their houses to ever bigger extents, raising the possible severe consequences to their own financial stability when the red-hot housing market begins to cool.