Household debt approaches 2008 peak level, New York Fed says

by MPA21 Feb 2017

Mortgages and credit cards drove a $226-billion rise in consumer debt during the fourth quarter of 2016, the New York Federal Reserve has revealed.  More than half of (57%) of the figure came from the $130-billion increase in mortgage loan balances.

Household debt rose 1.8% from the third quarter to reach $12.58 trillion, which is just 0.8% below its peak of $12.68 trillion reached in the third quarter of 2008. Mortgages remained the largest component of household debt. 

“Mortgage balances increased and mortgage originations reached the highest level seen since the beginning of the Great Recession,” the New York Fed said. “Mortgage delinquencies remained mostly unchanged and the delinquency transition rates for current mortgage accounts improved slightly. … New foreclosure notations reached another new low for the 18-year history of this series.”

The New York Fed observed hikes across all debt products:

  • Auto loan balances: 1.9% ($22 billion)
  • Credit card balances: 4.3% ($32 billion)
  • Mortgage balances: 1.6% ($130 billion)
  • Student loans: 2.4% ($31 billion)

Balances on home equity lines of credit (HELOC) were roughly flat, rising by $1 billion to $473 billion.

“Debt held by Americans is approaching its previous peak, yet its composition today is vastly different as the growth in balances has been driven by non-housing debt,” said New York Fed senior vice president Wilbert van der Klaauw.


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