US consumer debt rises in Q4 by most since 2007

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Greater confidence among Americans has led to a surge in household debt not seen since the recession began, according to new figures from the Federal Reserve Bank of New York.

Mortgages, credit cards, auto loans and student loans together rose $241 billion, or 2.1 percent, to a total of $11.52 trillion between October and December. It is the biggest quarterly rise since 2007.

Young people are especially borrowing more—younger age groups drove balance increases for almost every type of loan.

The exception is student loans—even older students have increased their borrowing, according to a post on the New York Fed's Liberty Street blog.

Student loan balances have grown more than any other loan type in percentage term. Outstanding student loan balances were up $53 billion to $1.08 trillion in the fourth quarter.

Auto loans rose by $80 billion, and balances on credit cards balances rose by $4 billion over the previous year.

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Mortgage balances, which form the bulk of household debt, grew $16 billion in the fourth quarter of 2013 from a year earlier. A decline in the number of bankruptcies and foreclosures mostly fueled the increase.

Borrowing is back: Huge increases in debt

The numbers indicate Americans are more willing to borrow than they have been over the last several years, though other statistics indicate some caution remains.

For example, new mortgages and new auto loans fell—to $452 billion and $88 billion, respectively. The only other major category to see a decline was the home equity line of credit (HELOC), dropped by $6 billion to $529 billion.

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Despite the increase in borrowing, late payments on student debt are dropping— another good sign. The number of loans behind in payments by 90 days or more dropped 0.3 percent in the third quarter.

Overall household delinquency rates also dropped 0.3 percent to 5.0 percent in the three months to December 31, extending a post-recession trend, but credit card delinquency rose slightly to 9.5 percent.

By with Reuters