Smart Borrower Blog

American Household Debt Reaches All-Time High


Aug 23rd, 2017 @ 1:26 PM by Amber Nelson


Americans increased their debt loads enough for a record high in the second quarter, according to a new report from the Federal Reserve Bank of New York, with credit card delinquencies rising enough to cause concern.

Total U.S. household debt rose to $12.48 trillion during the months of April, May and June, an increase of $114 billion from the first quarter and $552 billion from the previous year. Last quarter, household debt topped pre-recession levels. The new level is 14 percent higher than the low point of 2007-2009 financial crises.

This quarter mortgage debt climbed to $8.69 trillion, up $329 billion from a year ago. Student loan debt increased to $1.34 trillion, up $85 billion from the year before. Auto loan debt rose to $1.19 trillion, up $55 billion compared to the previous year. Credit card debt reached $784 billion, up $55 billion on a yearly basis.

While only 4.8 percent of all household debt is delinquent, the proportion of late credit card payments “ticked up notably” to 7.4 percent, the New York Fed said. This is the first time since 2009 that more Americans have fallen behind on their payments than the year before. The increase is disturbing considering the economy is in recovery mode and the jobs market expanding.

“The current state of credit card delinquency flows can be an early indicator of future trends and we will closely monitor the degree to which this uptick is predictive of further consumer distress,” said New York Fed economist Andrew Haughwout.

Student loan debt also continues to show worrisome rates of delinquency. In the second quarter 11.2 percent of all student loans were behind on payments, up from 11.0 percent during the first quarter. Heavy debt loads and delinquencies could influence the housing market and other big-ticket purchases for younger Americans for years to come.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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