Mortgages take a back seat as consumer debt levels soar

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Mortgage debt outstanding remains below pre-crisis levels and home equity is growing, even as overall consumer debt is on pace to surpass its previous 2008 peak by $1 trillion, according to LendingTree.

U.S. consumers carried 5.5% less mortgage debt in the first quarter of 2018 than they did in the third quarter of 2008, as a result of falling homeownership rates, home prices and interest rates during and after the Great Recession.

Now, as home prices and wages are increasing, homeowners have more equity and their mortgages are less of a liability. Mortgage balances represented 68% of consumers' disposable income during the first quarter of 2018, down from 98% in the third quarter of 2008.

Overall household debt, which includes mortgages, as well as consumer credit, should hit $15.7 trillion by the end of the second quarter, up from $14.7 trillion almost 10 years ago.

Consumer credit debt loads — consisting of credit cards and auto and student loans — are up 45% from 3Q08 and on pace to top $4 billion by December. Student loan balances, the fastest growing type of consumer credit, has risen 130% since the start of the housing crisis. Auto loan debt grew at a slower pace, increasing 39% since 2008.

Meanwhile, household net worth hit the $100 trillion mark for the first time in 1Q18, with assets gaining more than $1.07 trillion and outpacing additional debt accumulated by consumers, according to Federal Reserve data cited in the LendingTree report.

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