U.S. households owe record amount, topping pre-recession peak

U.S. households owe record amount, topping pre-recession peak

U.S. households owe record amount, topping pre-recession peak

Total household debt totaled $12.73 trillion in the first quarter, representing a 1.2% increase from the final three months of 2016 and a 14.1% advance from the 2013 financial-crisis low, according to data from the New York Federal Reserve released Wednesday. The quarterly increase brought household debt above its 2008 peak and was driven by increases in almost every debt category.

On student debt, the percentage of student loan balances that transition to serious delinquency has remained high, around 10% and that has been the case over the past five years.

While the percent of debt 90 days delinquent did rise for the second straight quarter, it remains well below the level of 2008 and substantially below the level of the worst days of the financial panic.

Delinquency rates are computed as the proportion of the total outstanding debt balance that is at least 90 days past due.

Balance sheets look different now, with less housing-related debt and more student and auto loans. Some 19.6% of auto-loan originations last quarter went to borrowers with credit scores below 620, down from 29.6% a decade earlier.

While mortgage balances still make up the majority of household debt, they are a smaller share of total obligations, the report showed. Some 203,000 consumers had a bankruptcy notation added to their credit reports in the first quarter of 2017, which is 1.7% lower than a year earlier, and the New York Fed called it another record series-low. The Fed estimates that the true figure could be double that amount, because many borrowers are able to defer loan payments while they continue their studies or if they are unemployed.

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"These shifts in borrowing patterns and characteristics of borrowers, paired with the long economic recovery and a strong labor market, have resulted in very low delinquency rates for most types of debts except for student loans", the Fed wrote in a post.

Americans aged 60 and older hold 22.5 percent of all loans, up from 16 percent in 2008, the New York Fed said in a separate presentation in April. The number of credit inquiries within the past six months, which the New York Fed calls an indicator of consumer credit demand, declined from the previous quarter to 162 million.

Auto loans have remained relatively available to subprime borrowers, helping fuel the record vehicle sales of recent years as interest rates have been low. That's up from just 36 percent in 2008.

Mortgage debt proved to be the highest increasing debt factor, going up went up by $147 billion quarterly and $258 billion annually.

It may sound impressive that credit card balances were actually down by 1.9% (by $15 billion) in the first quarter, but there is a seasonal aspect to that component and there are some troubling signs on the internal credit card metrics.

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