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As of November 13th, for the 21st consecutive quarter, debt has reached a new high, but only modestly higher than the previous quarter. According to The Federal Reserve Bank of New York’s Quarterly Report on household debt, the debt increased from $13.87 trillion last quarter to $13.97 trillion in the most recent quarter.

But it seems that we’re seeing mixed signals once again. Although debt is steadily on the rise, all indicators point to a healthy and stable economy. Default on debt and delinquencies are at a low, and the quality of loan borrowers seems to have improved.

Mortgages, which are one of the biggest components of household debt, increased last quarter by $420 billion. But comparatively, the credit quality of these mortgages look good and default on these types of loans remains at a steady low. According to Wilbert van der Klaauw, senior vice president at the New York Fed, last quarter “while nominal mortgage balances [were] slightly above the previous peak seen in the third quarter of 2008, mortgage delinquencies and the average credit profile of mortgage borrowers have continued to improve.”¹ And we’re seeing the same trend continue into this quarter.

There are, however, a few areas of concern. The delinquency in student loans saw a huge rise in the last quarter. Additionally, auto loan delinquency is also creeping up and credit card debt saw a slight upward trend.

Despite the steady rise in household debt, there are higher-quality loans, healthy borrowers, and lower delinquency levels overall. A big part of that, one might argue, is due to the strength in employment numbers. Today, unemployment is the lowest it's been in decades.

How MX Can Help
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