American household debt is on track to surpass the peak debt level set in 2008, according to a new analysis by LendingTree
of Federal Reserve data. However, this situation is being exacerbated by non-mortgage debt.
LendingTree concluded that household debt will reach $15.7 trillion by the end of the second quarter, passing the $14.7 trillion level set 10 years ago. The main culprit behind this trend is student loan debt, which recently passed the $1.5 trillion, accounting for 42 percent of all consumer debt. In comparison, credit card debt is responsible for 27 percent of household debt.
But in the decade since the recession, mortgage-related household debt fell by 5.5 percent while consumer credit debt encompassing revolving credit and installment loans has increased by 45 percent. Furthermore, LendingTree noted that today’s households are better able to handle debt than they were a decade ago: Mortgage balances currently are around 68 percent of disposable income, and credit card balances are less than seven percent of income, compared to 10 years ago when the balances were as high as 98 percent and 10 percent, respectively.