New mortgages push household debt past $13 trillion
A rash of new mortgages and continued growth in credit card use pushed household debt beyond $13 trillion.
At the end of 2017, America bought up homes – and holiday gifts – at a greater rate than it has in several quarters, and the splurge in spending has sent the nation’s cumulative household debt to new records near $13.15 trillion.
The bulk of the increase came from $139 billion of new borrowing for homes, according to a snapshot of the country’s credit situation through the Consumer Credit Panel of the Federal Reserve Bank of New York.
The quarterly report noted that the median credit score of new mortgage borrowers has dropped slightly, meaning lenders are now more willing to expand opportunities for Americans to own a home of their own.
It’s been a long time coming. While overall household debt has eclipsed the previous peak in the fall of 2008, mortgages are still trailing their all-time high by 4.4%. And some places of the country, in particular, still haven’t gotten over the trauma of that crash.
Since the housing crisis in 2008, the growth in mortgage borrowing has concentrated within a swath of states from Montana and North Dakota to Texas and Louisiana, where balances are up more than 10%. Meanwhile, pockets in and around California, Florida and Michigan are seeing borrowing at levels still 10% or more below 2008 levels.
The latest data, however, show that the tide may finally be turning. The evidence is appearing in other stats too. Sales of new homes are the highest they’ve been in a decade – especially in these 10 cities, the FHFA has hiked its mortgage borrowing limit and there are still places where it’s cheaper to own than rent.
Other debt that also increased in the last quarter of 2017 included credit cards ($26 billion), student loans ($21 billion) and auto loans ($8 billion). In percentage terms, credit card debt continues to grow fastest. The holiday shopping quarter expanded credit card balances by 3.2%, while mortgages rose 1.6%, student loans rose 1.5% and auto loans increased 0.7%.
If the time has come to buy a new or different home, learn all about the mortgage lending process and compare the best rates and options in our complete guide to mortgages.