US total household debt level reached a new peak in the third quarter of 2017, driven by an increase in mortgage loans, according to a Federal Reserve Bank of New York report published on Tuesday.
The Center for Microeconomic Data’s latest Quarterly Report on Household Debt and Credit reveals that total household debt rose by $116bn to reach $12.96tn. This is $280bn above the previous 2008 third quarter high.
Balances climbed 0.6% on mortgages, 1.9% on auto loans, 3.1% on credit cards, and 1.0% on student loans this past quarter.
The Report is based on data from the New York Fed's Consumer Credit Panel, a nationally representative sample of individual- and household-level debt and credit records drawn from anonymised Equifax credit data.
Credit card and auto loan flows into delinquency (defaults) increased. Specifically, credit card flows into delinquency have increased over the past year, while auto loan flows into delinquency have been steadily increasing for several years. Also notable, auto loan originations were at $150.6bn, up slightly from the previous quarter, marking the second highest level in more than a decade.
Wilbert van der Klaauw, senior vice president at the New York Fed, said: “Delinquency flows across several debt types climbed this quarter, including for auto loans. Examining the auto loan market more closely revealed notable differences between auto finance and auto bank lenders. Delinquency rates among auto finance lenders are considerably higher and rising, especially for subprime borrowers, in part reflecting differences in underwriting standards.”
Mortgage balances and originations increased, and the median credit scores of borrowers for new mortgages increased slightly.
The share of mortgage balances that were 90 or more days delinquent continued to improve, printing at 1.4% in the third quarter, down from 1.7% at the beginning of 2017, and substantially improved from the 8.9% high reached in 2010.