U.S. households accumulate record amount of debt

U.S. household debt reached a record high in the first three months of this year, topping the previous peak reached in 2008.

Americans have stepped up borrowing over the past three years, yet the nature of what Americans owe has changed since the Great Recession. Student and auto loans make up a larger proportion of household debt, while mortgages and credit card debt remain below pre-recession levels.

The Federal Reserve Bank of New York said Wednesday that household debt, which also includes auto loans and home equity lines of credit, stood at $12.73 trillion in the first quarter. That's above the $12.68 trillion outstanding in the fall of 2008, the previous record. The figure isn't adjusted for inflation or population size.

"This record debt level is neither a reason to celebrate nor a cause for alarm," Donghoon Lee, research officer at the New York Fed said. "The debt and its borrowers look quite different today."

Measured as a percentage of the overall U.S. economy, household debt is still smaller than in 2008. It is equivalent to 67 percent of the economy now, compared with 85 percent nine years ago.

And with interest rates low, Americans are better able to handle the loans they've taken out. The percentage of all household debt that is seriously delinquent—meaning payments are 90 days or more overdue—is 3.4 percent. That's down from the post-recession peak of 8.7 percent in early 2010.

Just 203,000 Americans declared bankruptcy in the first three months of this year, the lowest in the 18 years that the New York Fed has tracked the data.

Still, there were some areas of concern. Auto loans have ballooned 44 percent to $1.17 trillion since the last peak in household debt nine years ago. And a greater percentage of those loans have fallen 90 days or more overdue: 3.8 percent now, up from 3.3 percent two years ago. Still, that's down from a recent peak of 5.3 percent in late 2010.

Student loans are also a potential trouble spot: They topped $1.3 trillion in the first quarter, soaring by 120 percent since 2008. Nearly 11 percent of that debt is 90 days overdue or more. The Fed estimates that the true figure could be double that amount, because many borrowers are able to defer loan payments while they continue their studies or if they are unemployed.

But the overall picture also has many bright spots. More credit is held by older and more credit-worthy Americans, which should make defaults less likely. Older households generally have higher incomes and wealth than younger ones.

Americans aged 60 and older now hold 22.5 percent of all loans, up from 16 percent in 2008, the New York Fed said in a separate presentation in April.

The shift has been particularly dramatic in the case of mortgages, which have become much harder to obtain for Americans with lower credit scores.

Nearly 61 percent of new mortgages in the first quarter went to borrowers with credit scores of 760 or higher, according to the New York Fed's report. That's up from just 36 percent in 2008. Only about a third of Americans have a score that high.