Mortgages push increase in total household debt

by Francis Monfort22 May 2018

A $57 billion increases in mortgage balances drove the first-quarter increases in total household debt, according to the Quarterly Report on Household Debt and Credit released by the Federal Reserve Bank of New York.

Household debt totaled $13.21 trillion in the first quarter, an increase of $63 billion, or 0.5%, from the previous quarter. The quarter is the 15th consecutive quarter with an increase. Meanwhile, mortgage debt totaled $8.94 trillion at the end of the period.

While mortgage balances increased, balances on home equity lines of credit (HELOC) continued their downward trend, declining by $8 billion, to $436 billion. Mortgage originations declined slightly during the quarter to $428 billion from $452 billion in the fourth quarter. The median credit score of newly originating mortgage borrowers increased from 755 to 761.

“While housing wealth is at an all-time high, it has shifted into the hands of older and more creditworthy borrowers, in part because of tight mortgage lending standards,” said Andrew Haughwout, senior vice president at the New York Fed. “An increased amount of available home equity should make the household balance sheet more resilient in the event of a financial shock, though that may not be an option for lower-credit-score borrowers.”

Student loan debt increased $29 billion during the quarter to $1.41 trillion, while auto loan debt rose $8 billion to $1.23 trillion. Credit card debt posted a $19 billion decline to $815 billion.

The report is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data.

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