Smart Borrower Blog

Household Debt Tops Pre-Recession High

Feb 20th, 2019 @ 9:58 PM by Amber Nelson

Americans owed $13.54 trillion in household debt as of the 2018 fourth quarter, according to data from the Federal Reserve Bank of New York, a 0.2% increase from the third quarter and the 18th straight quarterly gain.

Total household debt has surpassed even the pre-recession peak of $12.68 trillion and is 21% higher than the post-crisis trough.

The jump in debt was led by $9 billion increase in auto loans in the 4th quarter. Originations topped out at $584 billion for all of 2018, the highest level in the 19 year-history of the New York Fed data collection. However, the number of auto loans in serious delinquency rose to 2.4% of all loans, the highest percentage in over a year. Most of those delinquencies belong to subprime borrowers.

Debt loads also rose in both the student loan and credit card sectors. Student loan debt increased to $1.46 trillion the 4th quarter, up from $1.44 trillion in the third. During the same time, credit card balances jumped $26 billion to $870 billion.

The increases in household debt were only tempered by declines in mortgage and HELOC spending. Mortgage originations dropped to $410 billion, down from $445 in the 3rd quarter, the lowest level in 14 years. Mortgage balances for all new and existing loans held steady at $9.1 trillion. Rising interest rates made refinancing less attractive, while climbing house prices kept many away from home purchase mortgages. Fortunately, mortgage delinquencies were also little changed, with just 1.1% of all loans behind by at least 90 days.

And even though Americans have more home equity today than ever before, Home Equity Lines of Credit (HELOCs) were less popular, falling $10 billion in the 4th quarter to $412 billion, a 14-year low.

Overall consumer debt delinquency rates were unchanged from the 3rd quarter, resting at 4.7% of total outstanding household debt.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to and

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