New York Fed: Q1 U.S. Household Debt Surpassed Peak Set In 2008


U.S. household debt increased 1.2%, or $149 billion, in the first quarter compared with the fourth quarter to reach $12.73 trillion, according to the New York Fed’s Quarterly Report on Household Debt and Credit.

That surpasses the peak of $12.68 trillion reached in the third quarter of 2008, according to the report.

Of the total household debt owed, about 68%, or $8.63 trillion, was mortgage debt. That’s an increase of $147 billion compared with the fourth quarter of 2016.

That means the bulk of the overall, quarter-over-quarter increase of $149 billion was mortgage debt.

Balances on home equity lines of credit (HELOCs) were at about $456 billion, a decrease of about $17 billion compared with the fourth quarter.

Credit card debt represented about 6% of total debt, which is a decrease of about $15 billion compared with the fourth quarter.

Auto loan debt, which represented about 9% of total household debt, increased by about $10 billion, and student loan balances, which represented about 11% of total debt, grew by $34 billion.

The main reason debt composition is different when compared with the pre-recession years is because of the increase in student loan debt.

Although the delinquency rate for mortgages increased slightly, it decreased for all other loan types. What’s more, the delinquency rate for all loan types was at or near pre-recession lows.

Credit for mortgages and auto loans remained somewhat tight: The median origination score for mortgages increased to 764, while the median score for auto loans ticked up to 706.

The number of loans issued to borrowers with credit scores under 660 shrank, year over year, while the number of loans issued to borrowers with credit scores over 720 increased considerably, according to the report.

Mortgage originations, including both refinances and purchases, for the first quarter came in at around $491 billion, down from $617 billion in the fourth quarter.

“Almost nine years later, household debt has finally exceeded its 2008 peak, but the debt and its borrowers look quite different today,” says Donghoon Lee, research officer at the New York Fed, in a statement. “This record debt level is neither a reason to celebrate nor a cause for alarm. But it does provide an opportune moment to consider debt performance. While most delinquency flows have improved markedly since the Great Recession and remain low overall, there are divergent trends among debt types. Auto loan and credit card delinquency flows are now trending upwards, and those for student loans remain stubbornly high.”

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