Tag Archives: Consumer Debt

U.S. Consumer Debt Climbs to $17.3 Trillion

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Source: Statista

According to the New York Fed’s Quarterly Report on Household Debt and Credit, total household debt in the United States grew by $228 billion in the third quarter of 2023, to reach an all-time high of $17.3 trillion, at least in nominal terms. The increase was mainly driven by mortgage, credit card and student loan balances, which increased $126, $48 and $30 billion, respectively, with credit card debt growing the fastest in relative terms at nearly 5 percent compared to the previous quarter and 16.6 percent year-over-year.

Despite the high level of debt, overall delinquency rates remain remarkably low, despite a steady upward trend from the historic lows seen during the pandemic, when consumers were flush with cash. Looking at total consumer debt, 97 percent of the total balance was current or non-delinquent (i.e. all payments made on time or less than 30 days late) at the end of Q3 2023, up from 95.3 in Q4 2019 and from less than 90 percent in the midst of the financial crisis.

The faster-than-usual increase in consumer debt over the past three years was mainly driven by a record volume of mortgage originations, as many households took advantage of historically low rates to refinance their mortgage and even take out some cash in the process. According to the New York Fed, 14 million mortgages were refinanced during the pandemic refinancing boom, during which home owners extracted $430 billion through cash-out refinances. As a result, mortgages accounted for 82 percent of the increase in total consumer debt since Q4 2019, followed by auto loans and credit card debt, which accounted for 8 and 5 percent of the $3.1-trillion increase, respectively.

Infographic: U.S. Consumer Debt Climbs to $17.3 Trillion | Statista

LendingTree’s Consumer Debt Outlook Finds Americans On Pace to Amass a Collective $4 Trillion in Consumer Debt by the End of 2018

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LendingTree releases first Consumer Debt Outlook report, a monthly analysis of Federal Reserve data

Charlotte, NC – May 10, 2018 (PRNewswire) LendingTree®, the nation’s leading online loan marketplace, today released its first Consumer Debt Outlook for May 2018. LendingTree’s analysis of the latest Federal Reserve data found that despite a recent pause in credit card balance increases, Americans are on pace to amass a collective $4 trillion in consumer debt by the end of 2018. Collectively, Americans owe more than 26 percent of their income on consumer debt, up from 22 percent in 2010.

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Incomes growing, but consumer borrowing growing faster
Since 2013, Americans have been accumulating more debt. Overall, the percentage of total non-housing debt, at 26 percent of Disposable Personal Income, is now even higher than during the credit boom in the mid-2000s.

However, the primary difference in the past few years is how Americans borrow. When comparing the growth in mortgage-related debt to other types of debt (like credit card debt and auto loans), the latter is growing at more than 7 percent annually, while housing-related debt has grown at an annual rate of a little more than 2 percent. Growth in consumer debt can cause greater strain on personal finances; it enables spending on consumables and depreciating assets like cars, rather than traditionally appreciating assets like a home.

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Temporary dip in credit card debt
Overall, the amount American consumers owe on revolving credit (primarily credit card) and non-revolving credit (like auto loans and student loans) fell by $2.9 billion in March – a less than 0.1 percent drop to $3.824 trillion. Revolving credit, primarily credit card spending, actually fell by $8.1 billion to $976.6 billion, the second consecutive month of declining balances.

But based on the longer term trend, LendingTree’s analysts expect consumers will owe more than $4 trillion on these types of credit, possibly as soon as this calendar year. For nearly two years, consumer credit has grown at a steady rate of 5 to 6 percent annually. Even if borrowing levels increase at the low end of that range, LendingTree analysts expect the total amount owed will exceed $4 trillion by the end of 2018.

Credit card borrowing remains sustainable
Credit card delinquency rates remain relatively low, despite recent reports of increases in charge-offs at some credit card issuers.

According to recent Federal Reserve’s Survey of Consumer Expectations, consumers appear to feel relatively comfortable with servicing their debts. On average, consumers reported that they expected there was only a 10.72 percent chance that they would miss a loan payment in the next three months – the lowest reading since the survey began in 2013.

The consumer is leading the way, again
When the Commerce Department delivers the Gross Domestic Product report every quarter, you’ll often read that the consumer represents two-thirds of the total economy, or that the consumer is growing the economy.

While personal consumption has always represented the lion’s share of GDP, it’s even more so in the current economic expansion. Personal consumption now exceeds two-thirds of GDP, higher than in any period since the end of World War II.

And since the end of deleveraging, when consumers reversed their borrowing habits following the housing bust, personal consumption represents nearly 80 percent of the total change in GDP.

To view the full report, visit: https://www.lendingtree.com/finance/consumer-debt-report-may-2018/

About LendingTree
LendingTree (NASDAQ: TREE) is the nation’s leading online loan marketplace, empowering consumers as they comparison-shop across a full suite of loan and credit-based offerings. LendingTree provides an online marketplace which connects consumers with multiple lenders that compete for their business, as well as an array of online tools and information to help consumers find the best loan. Since inception, LendingTree has facilitated more than 65 million loan requests. LendingTree provides free monthly credit scores through My LendingTree and access to its network of over 500 lenders offering home loans, personal loans, credit cards, student loans, business loans, home equity loans/lines of credit, auto loans and more. LendingTree, LLC is a subsidiary of LendingTree, Inc. For more information go to www.lendingtree.com, dial 800-555-TREE, like our Facebook page and/or follow us on Twitter @LendingTree.

MEDIA CONTACT:

Megan Greuling
(704) 943-8208
Megan.greuling@lendingtree.com