Home/Mortgages/Household Debt Rises for First Time in Over Three years

March 9, 2012 (Chris Moore)

Household debt in the United States increased at an annual rate of 0.3 percent in the fourth quarter of 2011 according to the Federal Reserve’s latest Flow of Funds Report, the first increase in household debt since the second quarter of 2008.

Total outstanding household debt increased from $13,209.3 billion in the third quarter of 2011 to $13,222.9 billion in the fourth quarter, an increase of 13.6 billion. Total household debt peaked in the second quarter of 2008 at $13,900.9 billion.

The increase in debt was led by a $42.6 billion increase in new consumer debt, which includes auto loans and credit cards. That was a 1.7 percent increase from the third quarter and the highest amount of debt consumers had taken on any one quarter since the third quarter of 2007.

Total outstanding consumer debt increased from $2.478 trillion in the third quarter of 2011 to $2.521 trillion by the end of the fourth quarter. Consumer debt peaked in the second quarter of 2008 at $2.609 trillion and fell to a four year low in the third quarter of 2010 but has been on the rise every quarter since.

Households continued to shed their home mortgage debt in the fourth quarter, paying off a total of $34.8 billion worth of mortgage debt.

Total mortgage debt fell 0.4 percent from the third quarter, falling from $9.875 trillion to $9.841 trillion. The last time that total mortgage debt was that low was in the fourth quarter of 2006 when total mortgage debt stood at $9.868 trillion. Household mortgage debt peaked at $10.615 trillion in the first quarter of 2008.

For the entire year of 2011, total household debt declined by 0.8 percent, mortgage debt declined by 2.1 percent and consumer debt increased by 3.5 percent.

Household net worth, the difference between the value of assets and liabilities, was $58.5 trillion at the end of 2011, about $1.2 trillion more than at the end of the third quarter, but still down for the entire year.

Tags: Federal Reserve, Flow of Funds, mortgage debt, consumer debt, household debt

Federal Reserve