US households hold a record amount of debt

US households hold a record amount of debt

US households hold a record amount of debt

While mortgage loans still account for the vast majority, about $9.1 trillion in the three months through March, a larger portion is made up of other debt, such as student and auto loans, than it was at the time an imploding housing bubble froze credit markets, according to a report from the Federal Reserve Bank of NY.

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

Mortgages, which make up the biggest component of overall household debt, rose to $8.63 trillion while new mortgage balances declined during the quarter to $491 billion.

At the same time the NY Fed reports that credit conditions tightened for obtaining auto loans and mortgages. This all-time high now stands at $12.73 trillion and was $149 billion higher than in the fourth quarter of 2016.

Student loan debt rose by $34 billion to $1.34 trillion and was up from about $500 billion in 2007, trailing only mortgages.

Credit card balances shrunk by $15 billion to $764 billion, but there has been a recent uptick in delinquencies on these payments. By comparison, quarterly mortgage originations were averaging about $650 billion during the housing bubble before plunging to less than $300 billion four years ago.

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Total delinquency was flat last quarter at 4.8%, the lowest level since before the recession.

"Performance on mortgages has continued to improve, while auto loan delinquency flows have been trending upward since 2012".

And auto loan and credit card debt have edged higher, with auto debt that's at least 90 days delinquent rising to 7.5% from 7.1% during the first three months of the year.

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.

But lenders have responded by tightening credit standards, a development that Zandi said makes him less anxious about the risk of an auto loan crisis that traces the housing bust. While balances have steadily shifted to more credit-worthy borrowers, New York Fed economists raised some concern over the 11 percent of student loan debt that was "seriously delinquent" at the end of March.

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