WASHINGTON: Total debt held by US households surged by nearly US$400 billion in 2018 to more than US$13.5 trillion, marking the sixth straight annual increase, even as home mortgages declined, according to data released Tuesday.
That puts total debt US$869 billion higher than the previous peak, just before the start of the global financial crisis in late 2008, the New York Federal Reserve Bank said in its quarterly report.
A decade after the crisis, mortgage debt increased US$242 billion to US$9.1 trillion, but new home loans originated last year fell US$131 billion to the lowest point in four years, the data showed.
But auto loans and student debt continued to rise.
“Auto loan originations for 2018 reached an all-time high,” said Joelle Scally, Administrator of the Centre for Microeconomic Data at the New York Fed.
Auto loans jumped US$53 billion to US$1.3 trillion – the highest in the 19-year history of the data – and despite a rise in loans going to more creditworthy borrower “its performance has been slowly worsening.”
“Growing delinquencies among subprime borrowers are responsible for this deteriorating performance and younger borrowers are struggling most acutely to afford their auto loans,” Scally said in a statement.
Student debt jumped US$79 billion compared to 2017, to US$1.5 trillion, according to the report.
Many economists see the rising student debt burden crimping the economy, preventing college graduates from buying homes.
Credit card debt also jumped US$36 billion in the year and, though it has yet to break the US$1 trillion level, it was the first time it hit the 2008 peak, the report said.
Delinquency rates for debt more than 90 days past due worsened for credit cards and auto loans but was about flat for mortgages and student debt.