Mortgage debt isn’t the worry, it’s all the other stuff!

by Steve Randall21 Sep 2018

Ten years after the Great Recession and the US housing market is showing recovery in many markets, while mortgage debt is slightly lower than it was in 2008.

But the level of non-mortgage debt held by American consumers is growing and an analysis by LendingTree forecasts it will be $4 trillion by the holiday season.

“The contrast between mortgage debt and other types of consumer debt is stark,” warns the report led by chief economist Tendayi Kapfidze.

Mortgage debt is growing in line with historic norms (2.8% current annual increase) and accounts for the bulk of consumer debt at $10.14 trillion but it’s down from $10.70 trillion in 2008.

The share of consumer debt that is mortgages is also lower at 72.4% in 2018 compared to 80.4% in 2008.

Auto, student, credit card debt all rising
Meanwhile, auto loans have steadily increased since the Great Recession ended in the third quarter of 2009, and now total $1.13 trillion compared to $798.14 billion in 2008. Consumers are paying back this debt over longer periods, meaning more interest overall. The current annual rate increase is 3.1%.

Student loan debt is now the largest debt consumers carry that’s not related to housing at $1.5 trillion (2008: $626.6 billion). The current annual rate increase is 5.7%.

Finally, credit card debt is roughly in line with 2008 levels with a current annual rate increase of 4.5%. However, the rise to $1 trillion of credit card debt from the $986.46 billion in 2008 was not consistent as tighter lending restrictions were in place until 2011.

 

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