Household Debt All Time High

Debt / Debt Restructure / Rates / Refinance

Household Debt All Time High

The pace of growth is slowing

debt

For the eighth consecutive quarter, consumer debt hit an all-time high.

Total household debt hit another record high in the fourth quarter of 2018 according to The Federal Reserve Bank of New York.

Yet total debt climbed just 3% year over year, compared to 4.5% in 2017, and was up just 0.2% from the prior quarter, versus an increase of 1.6% between the second and third quarters. Quarter-over-quarter loan growth had not been that weak since mid-2015.

But some economists say consumer confidence is weakening, and if that’s the case, consumer loan borrowing could level off or even decline in the coming quarters.

The Federal Reserve Bank of New York’s Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit. A summary of the report’s key items are shown below:

Housing Debt

  • Mortgage originations declined to $401 billion from $445 billion, the lowest level seen in nearly four years.
  • Mortgage delinquencies were roughly flat, with 1.1% of mortgage balances 90 or more days delinquent.

Non-Housing Debt

  • Outstanding student loan debt increased to $1.46 trillion from $1.44 trillion.
  • There were $144 billion in newly originated auto loans, continuing the nine-year growth trend. In fact, auto loan originations totaled $584 billion in 2018, the highest year in the 19-year history of the data for auto loan originations (in nominal terms).
  • Credit card balances rose by $26 billion to $870 billion. The increase in credit card balances is consistent with seasonal patterns but marks the first time credit card balances re-touched the 2008 nominal peak.

Bankruptcy Notations, Collection Accounts, and Credit Inquiries

  • About 195,000 consumers had a bankruptcy notation added to their credit reports, five thousand fewer than in the fourth quarter of 2017.
  • The number of credit inquiries within the past six months – an indicator of consumer credit demand – declined to the lowest level seen in the history of the data.
  • Account closings were at their highest level since 2010.

As many of us find ourselves in a very tight financial situation, hardly making it paycheck to paycheck, there is an opportunity for restructuring of your debt which could save you hundreds of dollars per month. It’s time to be financially educated and learn how to make your money work for you. Contact us for a review and detailed analysis of your current situation to see how quickly you can turn your debt into assets.

Our Certified Mortgage Planning Specialists can help you to, learn more.