Total Household Debt Surpasses 2008 Level; Red Flags Raised on Credit Cards and Auto Loans

The total amount of household debt reached $12.73 trillion as of the March 31, up $149 billion from the fourth quarter of 2016, according to data released today by the Federal Reserve Board of New York. The $12.73 trillion is the highest amount ever recorded, topping the third quarter of 2008 when the economy tipped and nose-dived into The Great Recession.

Auto loans, student loans, and mortgage loan balances all increased on a quarter-over-quarter basis while the amount of credit card debt declined by $15 billion.

The serious delinquency rate — defined as debts where no payment has been received for at least 90 days — dropped on an aggregate basis to 3.3%, from 3.4% at the end of 2016. Mortgages and credit cards saw increases in the serious delinquency rate while student loans saw a slight drop. The serious delinquency rate on auto loans and home equity lines of credit remained the same on a quarter-over-quarter basis. 

While the overall serious delinquency rate dropped, researchers noted that more credit card debt was transitioning from being current to being delinquent and more auto loans were beginning to transition from delinquent to seriously delinquent.

“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.”