US Household Debt Surpasses 2008 High, Hits Record $12.7 Trillion

Tyler Durden's picture

Total debt held by US household reached $12.73 trillion in the first quarter of 2017, finally surpassing its $12.68 trillion peak reached during the recession in 2008 according to the NY Fed's latest quarterly report on household debt. This marked a$479 billion increase from a year ago, and up $149 billion from Q4 2016 after 11 consecutive quarters of growth since the deleveraging period immediately following the Great Recession.

the quick and durty breakdown:

  • Total household indebtedness stood at $12.73 trillion as of March 31, 2017. This increase put overall household debt $50 billion above its previous peak set in the third quarter of 2008 and 14.1 percent above the trough set in the second quarter of 2013.
  • Mortgage balances, the largest component of household debt, reached $8.63 trillion as of March 31, a $147 billion uptick from the fourth quarter of 2016.
  • Balances on home equity lines of credit fell slightly in the first quarter, down $17 billion to $456 billion.
  • Non-housing debt saw mixed changes—an increase of $10 billion in auto loans and $34 billion in student loan balances, and a $15 billion drop in credit card balances.

Despite the new nominal all time high, on a relative basis, household debt remained below past levels in relation to the size of the overall U.S. economy, and in Q1 total debt was 66.9% of GDP, nearly 20% lower compared to 85.4% of GDP in Q3 of 2008.

Immediately following the 2009-2009 crisis, Americans reduced their debts to an unusual extent: a 12% decline from the peak in the third quarter of 2008 to the trough in the second quarter of 2013. New York Fed researchers, cited by the WSJ, described the drop as “an aberration from what had been a 63-year upward trend reflecting the depth, duration and aftermath of the Great Recession.”

Compared to 2008, balance sheets also look different now, with less housing-related debt and more, make that much, much more student and auto loans. As of the first quarter, 67.8% of total household debt was in the form of mortgages; in the third quarter of 2008, mortgages were 73.3% of total debt. Student loans rose from 4.8% to 10.6% of total indebtedness, and auto loans went from 6.4% to 9.2%.

“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.”

Overall credit rose at a brisk pace, led by $147 billion in  mortgage originations, $34 billion in student loans and $10 billion in auto loan increase, the overall pace of new lending slowed from the strong fourth quarter. Mortgage balances rose 1.7% last quarter from the final three months of 2016, while home-equity lines of credit were down 3.6% in the first quarter. Automotive loans rose 0.9% and student loans climbed 2.6%. Credit-card debt fell 1.9%, and other types of debt were down 2.7% from the fourth quarter.

Further details from the report:

Housing Debt

  • Mortgage balances increased again while originations declined and median credit scores of borrowers for new mortgages increased, reflecting tightening underwriting. There was $491 billion in newly originated mortgages this quarter.
  • Mortgage delinquencies worsened slightly, with 1.7% of mortgage balances 90 or more days delinquent in 2017Q1. About 91,000 individuals had a new foreclosure notation added to their credit reports between January 1 and March 31st, an increase since 2016Q4, although foreclosures remain low by historical standards

We were surprised by the NY Fed's optimistic read on mortgage originations which declined only modestly according to Equifax numbers...

... whereas the biggest US mortgage lender - Wells Fargo - recently reported a historic collapse in new mortgage applications, which lead originations, in the first quarter.



Non-Housing Debt

  • Auto loan balances increased by $10 billion Q/Q and $96 billion Y/Y, continuing their 6-year trend. Auto loan delinquency rates were flat, with 3.8% of auto loan balances 90 or more days delinquent on March 31.
  • Credit card balances declined by $15 billion Q/Q but increased by $52 billion Y/Y to $764 billion, while 90+ day delinquency rates deteriorated, and now stand at 7.5%.
  • Outstanding student loan balances increased by $34 billion Q/Q and $83 billion Y/Y, and stood at $1.34 trillion as of March 31, 2017, marking an increase in every year throughout the 18-year history of this series.

Confirming the broader transition to renter-housing, mortgage lending to subprime borrowers has collapsed since the housing crisis (both due to a reduction in demand and supply) in favor of loans to more crerdit-worthy borrowers. According to the detailed NY Fed report, in Q1, borrowers with credit scores under 620 accounted for 3.6% of mortgage originations, compared with 15.2% a decade earlier. The inversion at the top was also notable, as borrowers with credit scores of 760 or higher were 60.9% of originations last quarter, versus 23.9% in the first quarter of 2007.

Unlike houseing, howevern subprime auto loans have remained abundant, helping fuel the record vehicle sales of recent years as interest rates have been low. Some 19.6% of auto-loan originations last quarter went to borrowers with credit scores below 620, down from 29.6% a decade earlier according to the WSJ. The median credit score for auto-loan originations in the first quarter was 706, compared with 764 for mortgage originations.

A closer look at household bankruptcies & delinquencies in a time of near record low interest rates reveals the following:

  • Aggregate delinquency rates were roughly flat.
  • Bankruptcy notations reached another low the 18-year history of this series.
  • 7.5% of all credit card debt was seriously delinquent in Q1 2017
  • 11% of all student debt was seriously delinquent in Q1 2017
  • 3.8% of all auto loan debt was seriously delinquent in Q1 2017

Additionally, this quarter saw a notable uptick in credit card debt transitioning into delinquencies, a continued upward trend of auto loans transitioning into serious delinquencies, and student loan transitions into serious delinquencies remaining high.

The aggregate default rate in Q1 was 4.8%, or roughly unchanged with some variation across product types. As of March 31, 4.8% of outstanding debt was in some stage of delinquency. Of the $615 billion of debt that is delinquent, $426 billion is seriously delinquent (at least 90 days late or “severely derogatory”). The percent of student loan balances that transition to serious delinquency has remained high, hovering around 10 % at an annual rate over the past five years.

* * *

Perhaps the most troubling update in the Q1 credit update was that the number of credit inquiries within the past six months – an indicator of consumer credit demand – declined from the previous quarter, to 162 million. This confirms what the NY Fed reported in its latest Senior Loan Officers Survey which found an unexpected collapse in both credit and auto loan demand.

It also helps explain the recent crash in both C&I and total loan issuance.

Declining household loan growth demand is typically an indication of a contracting economy. It is likely to deteriorate further as a result of rising interest rates, as the Fed continues to hike rates, which will lead to further pressure on loan demand, and result in an even greater slowdown for the economy.

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Shlomo Scheckelstein's picture

Keep buying and spending it is good for the economy.

Jim Sampson's picture



Take that second and stick it in stawks!

Darktarra's picture

Dummy Americans haven't learned shit! 

froze25's picture

Ehh if we adjust for inflation we would have to hit about 15.7 Trillion to be at the same level, so we got some room to go deeper into the hell hole of debt. Want to go through a very educating exercise, look into what you need to do to open a bank that is part of the Federal Reserve system, its an eye opener. Good luck getting your hands on the text books used to teach banking at any ivy league school, they keep them locked up tight!

BullyBearish's picture

“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” said Donghoon Lee, Research Officer at the New York Fed.


However bankers who live on debt slaves are indeed celebrating a 10-year enslavement spree courtesy of the fed...and the slaves will not be alarmed, because they are told not to be alarmed..."the water's not REALLY getting warmer"

meta-trader's picture

she was a waitress in a cocktail bar now she owns a jet...

mtl4's picture

It's clear from the the graph above that mortgage and especially auto and student loans are a problem (in part because of ultra low interest rates) but what's not on there and directly affects people's ability to service that debt is taxes........I'l bet the increase over that period would be shockingly telling as to where the real problem lies.

de3de8's picture

Really not a revelation considering inflation since last "high"

Consuelo's picture



C'mon Schmuley - tighten up that game...   


It's called: Stay in debt (to the Usurers)  

Offthebeach's picture

"Now's' a good time to buy."

National Association of Realtors 


Haus-Targaryen's picture

Oh man, next financial crisis massive debt write-offs in both student loans and new cars.  


LawsofPhysics's picture


"Full Faith and Credit"


Fizzy Head's picture

for the record: this phrase "Full Faith and Credit" is mastakingly used in reference to the fractional reserve banking and the federal reserve.however, it actual only applies to states within the constitution respecting other states public laws and does not apply to the private federal reserve, their records are private and they do not require any public audits by the public  governemnt.

... the rest of the story.

Seasmoke's picture

We aren't broke. We still have room on our credit cards !!

Silver Savior's picture

Not me. My peak credit was last year. No room to charge more.

Offthebeach's picture

Digital KREDick is unlimited. 

Deep In Vocal Euphoria's picture

lol this is not just gonna be the bond bubble...this is the whole system bubble...

Vlad the Inhaler's picture

This is the big one right here.  Govt can just keep adding more and more debt for decades but this sort of credit creates a drag on the consumer, there is a definite short term limit to it.

meditate_vigorously's picture

Just wait until even more legal immigrants and their progeny are handed visa and mastercard to supplement their EBT cards. You ain't seen nothing yet. Within a hundred years North America will be racially pure. Which race depends upon which one wins the ethnic wars. History rhymes and homogeneous nations are the norm, because this always happens when foreign populations move in (invited or otherwise there are plenty of documented examples on top of the inferred history).

jenniewadeguy's picture

The US will become homogenously Mulatto.

And that should allow us to dis them all big time at the Olympics.

meditate_vigorously's picture

Interracial marriage is on the decline, and it has never in human history been the norm, or else we wouldn't have races.

jenniewadeguy's picture

Marriage?  What does marriage have to do with anything, you big silly?  

Welcome to Negroid nation. Construction in progress. 

Step one (well underway) is to accept the Negro as your societal equal WITHOUT admitting to dramatic differences in IQ and sensibilities.

Step two (ramping up now) is for you to discern, but I will riddle you this hint: it isn't reading but it ryhmes with it.

Vlad the Inhaler's picture

Because white people can't be immigrants right?

froze25's picture

They can be but we all know the most illegal immigrants and the most legal immigrants aren't from European countries anymore, since 1965 immigration act.

medium giraffe's picture

Those numbers sure are whizzing along since the interest rate increase.

What could possibly go wrong?

Lady Jessica's picture

Why is the monetary base shrinking?

SimplePrinciple's picture

The monetary base is not shrinking much, just reflecting a whiff of Fed tightening.  Expect it to jump higher as lending contracts in earnest.

FreeShitter's picture

Aint life under usury just fucking dandy?

GunnerySgtHartman's picture

If people like being debt slaves, which so many of them apparently do!

Hikikomori's picture

The big problem - the auto loans.  Buying a house and getting a degree - although not guarantees of wealth, are a lot better than going into debt to buy an auto with a 100% guarantee of losing money.

Chryoprase the Troll's picture

Oh great. The next toxic crisis looks like being in student loans.

How are they going to foreclose on those?

GunnerySgtHartman's picture

Involuntary servitude - either on the students themselves (yeah right, wouldn't want to damage the feelings of the precious snowflakes) or through higher taxes on those who are productive and actually pay such things.

flea's picture

Notice the inverse relationship between central bank debt and labor force participation?

Catahoula's picture

 very troubling. 

dark fiber's picture

Oh this will be fun to watch.

moonmac's picture

Most American kids are just future Debt Slave Sheeple awaiting their miserable lives of peonage to Federal Reserve Members and all their corrupt cronies on Wall Street and in DC. They were told “Everyone Deserves a Trophy” so when all they get left with is a huge pile of un-payable debt then suicide becomes their only solution. Would it hurt to take out some gangbangers when you do it?

 Millennials really are worthless!

bugoutbagzyklonB's picture

Let me guess another Braindead and Ignorant Boomer who wants to blame everything on the Millennial generation?

Who raised the Millennials? Millions in the braindead and brainwashed class of AmeriKKKans like you who want to blame things on someone else instead of pointing the finger at themselves.

Great Job

rejected's picture

You do realize you just agreed with Moomac... Yes? 

bugoutbagzyklonB's picture

No that is your intepretation.

Silver Savior's picture

I don't have a lot of faith in millennials especially the newer ones. It's partly not their fault but on the other hand........ they think the scrip is real.

rosiescenario's picture

When the 2 biggest debtors (the government and the public) have control of the printing presses you can expect the debt to be "mitigated" by having the currency (in which the debt is denominated) become less valuable.....


We have seen this process for the past 50+ years....sometimes it is gradual and sometimes explosive....I'd vote for 'explosive' in the near future...

directaction's picture

Just wait until all those newly home-equity-rich idiots start up the equity cash machine.

They do it each time right when the bubble peaks. I can't wait.  

Froman's picture

But, the MSM keeps telling us that all of the retailers that are going bankrupt because of on-line shopping and the internet and that is has nothing to do with debt laden consumers.

moonmac's picture

Fathers have been getting their sons jobs at our factory for decades. Except now the dad’s only make 3 dollars more than their kids who've never worked a day in their lives.

Minimum Wage Requirements in a Highly Deflationary Globalized Economy is a totally whacked concept. How do these fathers with 20 years experience not want to kill themselves?

Silver Savior's picture

I been working at the same place for 11 years. New hires are catching up to me in pay and I don't think that is right. Nothing I can do about it besides get discouraged and go on welfare.

Spartacus72BC's picture

Most college loans is willingly putting yourself in life long indentured servitude. Tell your kid to go into the trades to be an actually useful person, unless they happen to be a science/engineering genius. I'm happy to see most social science grads saddled with debt, they deserve it for being wastes of humans.

whatisthat's picture

I would observe you should not be a moron and purchase big expense items unless you have the money available...