Record debt, easy money a bad recipe – Orange County Register

Household debt has reached a new all-time high, and while the data do not indicate an imminent economic collapse, the debt binge cannot endure forever.

Total household debt reached $12.73 trillion as of March 31, eclipsing the previous record of $12.68 trillion set during the third quarter of 2008, the Federal Reserve Bank of New York’s latest “Quarterly Report on Household Debt and Credit” revealed. Among the major debt categories, mortgage balances accounted for $8.63 trillion, followed by $1.34 trillion in student loan debt, $1.17 trillion in auto loan debt, $764 billion in credit card balances and $456 billion in home equity lines of credit.

While the debt bubbles began to reinflate after the aftermath of the Great Recession, the composition of that debt has changed, with mortgage debt making up a smaller share and debt from auto loans, and especially student loans, much higher.

Student loan debt continues to be problematic. While about 4.8 percent of all debt was in some form of delinquency, student loan delinquency remained substantially higher, with 11 percent of aggregate debt 90 or more days delinquent or in default. Moreover, as the New York Fed report explained in a footnote, even this significantly understates actual student loan delinquency rates “because about half of these loans are currently in deferment, in grace periods or in forbearance and therefore temporarily not in the repayment cycle. This implies that among loans in the repayment cycle delinquency rates are roughly twice as high.”

The report also included some state-level data. Among a selection of 11 states, including the most populous states, California had the highest debt balance per capita of $68,460, nearly 44 percent higher than the national average of $47,650. In fact, as further evidence of California’s high housing prices and affordability problems, the state’s mortgage debt alone surpassed the total debt national average (and the total debt of all other states…

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