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US household debt climbs to $12.25 trillion in first quarter

The New York Federal Reserve reported Tuesday that total household debt climbed a slim 1.1 percent in the first quarter to $12.25 trillion. That's the seventh straight quarterly rise, and the biggest increase in mortgage debt since the Great Recession began.

There were also increases in auto and student loans, but credit card and home equity debts declined.

Total debt remains more than $400 billion below the peak of 2008, so per capita debt continues to decline. And rather than looking like a late-stage debt-cycle, credit quality continues to improve.


Credit card transaction
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Newly delinquent loans rose by the least since 2005, up just $138 billion. By contrast, in the teeth of the recession, the stock of delinquent consumer debt was surging by more than $400 billion a quarter. New foreclosures and bankruptcies both fell.

This is actually a mixed signal. On the banking side, it speaks of underwriting loans mostly to the best credits. The best credit scores before the recession got 24 percent of all mortgages and the worst got 13 percent, in part because of subprime. Now, the best credits get nearly 60 percent of all mortgages, the second tier has fallen sharply to 17 percent from 32 percent, and for the bottom tier — the worst credits — there's no money.

That's good for the banks, but terrible if you're a consumer who doesn't have great credit. It raises questions about whether banks are too sheepish in their lending, or regulations are too tough.

Some problem areas remain. Total auto and student loan debts remain above $1 trillion. The percent of loans that are at least 90 days delinquent rose slightly for autos but fell for mortgages, HELOCs, credit cards and even student loans.

So Tuesday's was not a bad picture of the consumer and debt. It's certainly not one that suggests we are in the later innings of a credit cycle.