On Wednesday, the New York Federal Reserve released its Q1 report on household debt and credit. According to the report, total household debt totaled $12.73 trillion in Q1 2017. This means that household debt has finally surpassed its $12.68 trillion peak reached during the recession in 2008. This is a $149 billion quarterly increase.
“Almost nine years later, household debt has finally exceeded its 2008 peak but the debt and its borrowers look quite different today. This record debt level is neither a reason to celebrate nor a cause for alarm. But it does provide an opportune moment to consider debt performance,” said Donghoon Lee, Research Officer at the New York Fed. “While most delinquency flows have improved markedly since the Great Recession and remain low overall, there are divergent trends among debt types. Auto loan and credit card delinquency flows are now trending upwards, and those for student loans remain stubbornly high.”
Mortgage debt proved to be the highest increasing debt factor, going up went up by $147 billion quarterly and $258 billion annually. Total mortgage debt as of Q1 2017 was $8.63 trillion. Home equity line of credit decreased by $17 billion quarterly and $29 billion year-over-year, totaling $456 billion as of Q1.
The New York Fed found that mortgage balances increased again while originations declined and median credit scores of borrowers for new mortgages increased, reflecting tightening underwriting. Mortgage delinquencies worsened slightly, and the Fed noted that foreclosure notations increased but the Fed noted that they remained low by historical standards.
Additionally, other types of debt saw similar increases in Q1 2017, notably student loan debt, which grew by $34 billion in Q1, totaling $1.34 trillion. The fed also notes that student loan delinquencies have remained high, currently sitting at 11.2 percent, the highest delinquency rate of any of other debt type covered by the Fed.