The total U.S. household debt in the first quarter of 2017 was $12.73 trillion, up by $149 billion from the fourth quarter of 2016. The 1Q17 total household indebtedness, according to the New York Federal Reserve (NY Fed), surpassed the outstanding debts recorded in the third quarter of 2008 totaling $12.68 trillion.
Overall Household Debt Performance
Dong Hoon Lee, a research officer at NY Fed, was quoted as saying that U.S. household debts surpassing the 2008 level should not be a cause for alarm or celebration. “… it does provide an opportune moment to consider debt performance,” Mr. Lee added in an accompanying statement.
Per the Quarterly Report on Household Debt and Credit, 1Q17 marks the 11th quarter in a row that showed an increasing debt balance. It was also revealed that the rate of new credit extensions slowed slightly in 1Q17 compared to 4Q16.
The quarterly report was based on the NY Fed Consumer Credit Panel whose nationally representative sample data was pulled from Equifax credit reports. The report covers household debt in housing – mortgage balances – and non-housing such as student loans, auto loans, and credit cards.
1Q17 Housing, Non-Housing Debt Balances
According to the report, outstanding mortgage balances formed the largest component of 1Q17’s total household debt totaling $8.63 trillion, up by $147 billion from 4Q16.
The overall HELOCs or home equity lines of credit balances dipped by $17 billion, for a total of $456 billion during 1Q17.
Meanwhile, balances on auto loans and student loans also grew during the first quarter of 2017. In 1Q17, auto loans added $10 billion in balances while student loan balances grew by $34 billion.
As of the first quarter of 2017, outstanding student loans totaled $1.34 trillion and 11% of this total student debt was more than 90 days delinquent or in default status.
The increase in auto loan balances seen during the first quarter is a continuation of a six-year trend. Delinquency on auto loans was flat with 3.8% of total auto loan balances in 90+ delinquency.
Total outstanding credit card balances also increased by $15 billion, reaching $764 billion. There was a decrease in the number of credit cards that are 90 days or more delinquent, now at 7.5%.
Newly Originated Debt
In 1Q17, new mortgages – as they appear on credit reports and include refinanced mortgages – were originated totaling $491 billion, a decrease from $617 billion back in 4Q16.
The number of auto loans originated during the relevant quarter declined with balances of $132 billion as compared to 4Q16 but showed an increase from a year ago.
For the 17th consecutive quarter, overall credit card limits increased by 1.1%. Limits on HELOCs which are revolving debts like credit cards however decreased by $19 billion.
Per the report, credit inquiries which indicate demand for consumer credit fell to 162 million within the past six months.
Other Quarterly Highlights
- Credit scores: The report found that there was a tightening of credit with respect to mortgages and auto loans. This was shown by the median credit score for new car loans increasing to 706 and for mortgages to 764. Loans for borrowers with credit scores of below 660 also fell, a trend seen a year ago while loans originated for borrowers with credit scores of 720 above have increased considerably.
- Delinquency rates: Overall delinquency was roughly flat during 1Q17 according to NY Fed as it varies per loan product. The share of the total outstanding debt that was in some stage of delinquency was 4.8%. Of this $615 billion debt in delinquency, $426 billion is classified as seriously delinquent or severely derogatory – at least 90 days late.
- Bankruptcy numbers: The number of consumers with bankruptcy added to their credit reports fell by 1.7% in 1Q17 from a year ago and was a record low.