Non-mortgage consumer debt is sending the overall level of US household debt soaring.
The previous peak of 2008 is set to be smashed by the end of this month by $1 trillion with total mortgage and consumer debt reaching $15.7 trillion. Excluding mortgages, consumer debt is on target to hit $4 trillion by the end of 2018.
Analysis by LendingTree shows that household debt has been rising 3.4% annually including mortgage debt.
The report says that although mortgage debt comprises the largest amount of overall household debt, it weighs less on households now than in previous years.
Credit card debt and student loan debt have traded places in the past decade, the analysis shows. Student loans ($1.5 trillion) now make up 42% of all consumer debt compared to 27% for credit cards.
Debt higher but so is ability to service it
Since the third quarter of 2008, the peak of last decade's housing bubble, mortgage-related household debt has dropped 5.5% but consumer credit — a collection of revolving credit and installment loans, has increased by 45%.
While the levels of debt are increasing, LendingTree’s analysis shows that households are more able to service it than they were in 2008.
Mortgage balances currently are around 68% of disposable income, and credit card balances are less than 7% of income. In 2008, balances were as high as 98% and 10%, respectively.
Millennials though are generally shouldering the bulk of student loan debt and are underrepresented in homeownership rates.