US household debt surged $460 billion last year, the biggest increase in 10 years, and has nearly returned to the peak level before the global financial crisis, the New York Federal Reserve said Thursday.
However, the increase in recent years has been driven by student debt and auto loans, rather than by the mortgages that were central to the 2008 crisis.
And delinquency rates are less than half of what they were in the peak period, despite worrying trends in auto and student loans, the New York Fed said in its latest quarterly household debt and credit report.
At $12.58 trillion at the end of the year, total household debt is less than one percent below the peak in the third quarter of 2008, just before the crisis erupted.
But the share of credit that is delinquent was 3.3 percent at the end of the year, well below the 8.5 percent rate of late 2008.
And debt considered seriously delinquent, defined as being 90 days or more past due, was down to 3.3 percent from 5.1 percent.
“Debt held by Americans is approaching its previous peak, yet its composition today is vastly different as the growth in balances has been driven by non-housing debt,” said Wilbert van der Klaauw, senior vice president at the New York Fed.
Since reaching a post-crisis low point in mid-2013, “the rebound in household debt has been led by student debt and auto debt, with only sluggish growth in mortgage debt.”
Home mortgages still comprise about three-fourths of total household debt, and rose $231 billion last year. But the serious delinquency rate held steady at 1.6 percent in the second half of 2016, compared to 4.7 percent in the peak quarter.
With lenders keeping a tight rein on credit standards, most home loans are going to borrowers with high credit scores.
Auto loan balances continued their steady rise and auto loan originations for 2016 reached a new annual record in the 18-year history of this data series, jumping $93 billion last year.
Student loan balances jumped $78 billion last year and have risen in every year for the past 18 years. But in a troubling trend, the serious delinquency rate is now more than 11 percent, compared to eight percent in late 2008.
Credit card balances increased by $46 billion, and the aggregate credit card limit increased for the 16th consecutive quarter, with a serious delinquency rate of just above seven percent.
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