According to the Federal Reserve Bank of New York reports, at the end of 2016, total household debt climbed to $12.58 trillion, a significant increase of $266 billion from the third quarter. The largest increase in almost a decade is recorded where household debt ballooned by $460 billion for the year. In simple words, Americans debt load is flirting with 2008 levels when total consumer debt climbed to a record high of $12.68 trillion.
Mortgage balances increased and made up the bulk of household debt as the year ended at $8.48 trillion.
The growth in student debt, credit card debt and auto loans (all non-housing debt) are key factors fueling the debt increase. According to NY reports, student loans rose by $31 billion in the fourth quarter, auto loans jumped by $22 billion, and credit card debt rose by $32 billion which in total aim to hit $779 billion.
According to discover-USA, Wilbert van der Klaauw, a NY Fed senior vice president, said in the report. “Since reaching a trough in mid-2013, the rebound in household debt has been led by student debt and auto debt, with only sluggish growth in mortgage debt.”
The increase in these rates may sound alarming; the New York Fed expects household debt to reach the recorded 2008 peak sometime this year. They can find one difference between now and 2008 that is that there are “fewer delinquencies.”
According to sources, 4.8% of household debts were delinquent at the end of 2016, compared to 8.5% of delinquencies in the third quarter of 2008. Well, that’s a good sign.
Another difference they found is that of fewer bankruptcy filings. In the 2016 final quarter, a 4% drop in the bankrupt filings was noted when compared to the same quarter in 2015.
Should you need any assistance related to managing your debt or require other financial services such as Budget & Financial Freedom Counseling, Foreclosure Prevention Counseling, Pre & Post-Bankruptcy Counseling, Homebuyer Education Programs, Credit Review Counseling, please visit our website www.unitedcounselors.org.
Should you be having questions about avoiding bankruptcy: Read: Ways To Avoid Bankruptcy