Household Debt Jumps to End 2016

Household debt in the USA totals a staggering $12.58 trillion, a level not seen since 2008, according to the New York Federal Reserve's quarterly report released Thursday.

The ballooning debt figure is attributed mostly to rising reliance on home and auto loans, the report said.

Investors, meanwhile, are borrowing to snag more of those apparently-easy profits, with margin debt - money borrowed against stock portfolios to buy more shares - now above both 1999 and 2007 levels. To attract more customers, carmakers have to provide low interest loans which conversely affect the long-term goals of the company.

Vehicle loans delinquent by 30 days or more grew to $23.27 billion, the most since $23.46 billion in the third quarter of 2008. This fall in quality has subsequently resulted in several impacts, which include the increase in the duration of auto loans to 84 months at times.

Mortgage debt rose $231 billion (or 2.8 percent) during 2016, along with almost every other form of debt, including auto debt (up $93 billion, or 8.7 percent), credit card debt (up $46 billion, or 6.3 percent), and student debt (up $78 billion, or 6.3 percent).

Moreover, 75 percent of the auto loans originated from auto finance companies unlike credit unions and banks, which have been losing its credit standards since 2010.

Also in the past year, stock prices have risen from "near-record, overvalued-by-every-historical-measure" levels, to "new-record, grossly-overvalued" levels - and show no signs of slowing down.

Mortgage originations increased to the highest level since the Great Recession. This reflected an increase of around 6 million over the year.

At the end of 2016, 4.8% of debts were delinquent, compared to 8.5% of total household debt in the third quarter of 2008.

"An increase in delinquency is the natural outcome of that strategy", he said.

Student loan debts too have gone up.

The average monthly vehicle payment in the fourth quarter rose above $500 for the first time, according to the credit-rating agency Experian.

Credit card debts rose by $32 billion to hit $779 billion.

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