Household debt has risen to levels not seen since the financial crisis, but household balance sheets today are in much better shape, according to the New York Fed’s latest Quarterly Report on Household Debt and Credit.
While household debt rose $460 billion to $12.58 trillion as of year-end 2016, delinquency rates were under 5% compared to over 8.5% in the third quarter of 2008, after which they continued to rise.
In addition, mortgage debt and home equity lines of credit (HELOC), which drove the debt boom during the financial crisis, peaking at 79% of household liabilities, fell to 71%.
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Also, according to another New York Fed report, focusing on the “home ownership gap,” the number of households who owe more on their mortgage than their house is worth dropped to 1.5 million, down from an estimated 10.5 million in 2009, and the percentage of homeowners with positive equity in their homes rose. It was 63% as of the end of 2015 compared with about 53% in 2009.
“Debt looks very different in 2016 than it did the last time we saw this level of indebtedness,” according to the New York Fed’s debt update.
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