Viewing offline content

Limited functionality available

Dismiss
Deloitte Middle East
Annotations
  • Services

    What's New

    • Deloitte175

      Join us for a celebration of 175 years of making an impact that matters.

    • Building the Resilient Organization

      2021 Deloitte Global resilience report

    • 2020 Global Gender Impact Report

      A collection of Butterfly Effect stories highlighting how our Deloitte professionals are positively impacting the lives of women and girls around the world

    • Audit & Assurance

      • Assurance
    • Consulting

      • Strategy, Analytics and M&A
      • Customer and Marketing
      • Business Operations
      • Human Capital
      • Enterprise Technology & Performance
    • Financial Advisory

      • Mergers & Acquisitions
      • Forensic
      • Real Estate
      • Turnaround & Restructuring
    • Risk Advisory

      • Strategic & Reputation Risk
      • Regulatory Risk
      • Financial Risk
      • Operational Risk
      • Cyber Risk
    • Tax

      • Global Business Tax Services
      • Indirect Tax
      • Global Employer Services
    • Deloitte Private

      • Family Enterprise
    • Legal

    • Sustainability

  • Industries

    What's New

    • Deloitte perspectives

      Leadership perspectives from across the globe.

    • Deloitte Insights App

      Our thought leadership and Dow Jones news, now at your fingertips

    • Future of Mobility

      Learn how this new reality is coming together and what it will mean for you and your industry.

    • Consumer

      • Automotive
      • Consumer Products
      • Retail, Wholesale & Distribution
      • Transportation, Hospitality & Services
    • Energy, Resources & Industrials

      • Industrial Products & Construction
      • Mining & Metals
      • Oil, Gas & Chemicals
      • Power, Utilities & Renewables
    • Financial Services

      • Banking & Capital Markets
      • Insurance
      • Investment Management
      • Real Estate
    • Government & Public Services

      • Civil Government
      • Defense, Security & Justice
      • Health & Social Care
      • Transport
    • Life Sciences & Health Care

      • Health Care
      • Life Sciences
    • MENA Sovereign Wealth Funds

    • Technology, Media & Telecommunications

      • Technology
      • Telecommunications, Media & Entertainment
  • Insights

    Deloitte Insights

    What's New

    • Deloitte Insights Magazine

      Explore the latest issue now

    • Deloitte Insights app

      Go straight to smart with daily updates on your mobile device

    • Weekly economic update

      See what's happening this week and the impact on your business

    • Strategy

      • Business Strategy & Growth
      • Digital Transformation
      • Governance & Board
      • Innovation
      • Marketing & Sales
      • Private Enterprise
    • Economy & Society

      • Economy
      • Environmental, Social, & Governance
      • Health Equity
      • Trust
      • Mobility
    • Organization

      • Operations
      • Finance & Tax
      • Risk & Regulation
      • Supply Chain
      • Smart Manufacturing
    • People

      • Leadership
      • Talent & Work
      • Diversity, Equity, & Inclusion
    • Technology

      • Data & Analytics
      • Emerging Technologies
      • Technology Management
    • Industries

      • Consumer
      • Energy, Resources, & Industrials
      • Financial Services
      • Government & Public Services
      • Life Sciences & Health Care
      • Technology, Media, & Telecommunications
    • Spotlight

      • Deloitte Insights Magazine
      • Press Room Podcasts
      • Weekly Economic Update
      • COVID-19
      • Resilience
  • Careers

    What's New

    • Millennial Survey 2022

      Gen Zs and millennials are striving for balance and advocating for change.

    • Candidate Profile

      After applying for a job in this country, you can access/update your candidate profile at any time.

    • Job Search

    • Students

    • Experienced Hires

    • Executives

    • Life at Deloitte

    • Alumni

    • Diversity and Inclusion

  • XE-EN Location: XE-English  
  • Contact us
  • XE-EN Location: XE-English  
  • Contact us
    • Dashboard
    • Saved items
    • Content feed
    • Profile/Interests
    • Account settings

Welcome back

Still not a member? Join My Deloitte

Household debt

by Patricia Buckley
  • Save for later
  • Share
    • Share on Facebook
    • Share on Twitter
    • Share on Linkedin
    • Share by email
Deloitte Insights
  • Strategy
    Strategy
    Strategy
    • Business Strategy & Growth
    • Digital Transformation
    • Governance & Board
    • Innovation
    • Marketing & Sales
    • Private Enterprise
  • Economy & Society
    Economy & Society
    Economy & Society
    • Economy
    • Environmental, Social, & Governance
    • Health Equity
    • Trust
    • Mobility
  • Organization
    Organization
    Organization
    • Operations
    • Finance & Tax
    • Risk & Regulation
    • Supply Chain
    • Smart Manufacturing
  • People
    People
    People
    • Leadership
    • Talent & Work
    • Diversity, Equity, & Inclusion
  • Technology
    Technology
    Technology
    • Data & Analytics
    • Emerging Technologies
    • Technology Management
  • Industries
    Industries
    Industries
    • Consumer
    • Energy, Resources, & Industrials
    • Financial Services
    • Government & Public Services
    • Life Sciences & Health Care
    • Tech, Media, & Telecom
  • Spotlight
    Spotlight
    Spotlight
    • Deloitte Insights Magazine
    • Press Room Podcasts
    • Weekly Economic Update
    • COVID-19
    • Resilience
    • XE-EN Location: XE-English  
    • Contact us
      • Dashboard
      • Saved items
      • Content feed
      • Profile/Interests
      • Account settings
    26 April 2014

    Household debt Behind the Numbers, April 2014

    26 April 2014
    • Patricia Buckley United States
    • Patricia Buckley United States
    • Save for later
    • Share
      • Share on Facebook
      • Share on Twitter
      • Share on Linkedin
      • Share by email

    An overall increase in household debt levels signals a movement toward more normal lending patterns with one major exception: the explosive growth in student loan debt.

    Explore

    View the Behind the Numbers collection, a monthly series from Deloitte’s economists.

    The most recent Quarterly report on household debt and credit from the New York Federal Reserve Bank brought the welcome news that lending to households finally started to increase in 2013. The fourth quarter of 2013 saw the largest increase in total consumer indebtedness since 2007 and the first four-quarter increase since late-2008 in total outstanding debt.1 This is positive news in that it reflects the ability and willingness of individuals and families to invest in longer-lived assets such as homes, autos, and education. However, the changing composition of household debt due to substantial increases in student loan debt raises concerns.

    As shown in figure 1, consumers began reducing their debt levels as unemployment rose and the value of houses in many areas of the country plummeted during the recession that began in December 2007 and lasted through June 2009. Some of the debt reduction was voluntary as consumers cut back on spending, but some of the contraction was involuntary reductions stemming from foreclosures and other types of default. It has only been in the last couple of quarters that debt has begun to increase.

    Figure 1. Total debt balance and its composition

    Mortgages are the largest component of household debt. The calendar year 2013 ended a four-year streak of year-over-year declines as mortgage balances increased on net by $16 billion. Auto loans were also up for the year, increasing by $80 billion. Credit card debt was up only slightly ($4 billion), and revolving home equity loans declined by $34 billion. However, the largest change in 2013 was in student loans, which increased by $114 billion.

    To take a longer-term view, table 1 provides a comparison of household debt prior to the start of the recession with the current situation. In nominal dollars, overall debt remains 7 percent below its prerecession level, with mortgage debt alone currently over a trillion dollars lower than it was in the fourth quarter of 2007. Student loan debt is the only category that consistently increased in size during and after the recession. This doubling of student loan indebtedness moved this category of debt from the fifth largest at the end of 2007 to the second-largest category of debt after mortgages in 2013.

    Table 1: Total household debt

          In billions
      07:Q4 13:Q4 07:Q4 13:Q4
    Mortgage 73.6% 69.9% 9,101 8,049
    HE revolving 5.2% 4.6% 647 529
    Auto loan 6.6% 7.5% 815 863
    Credit card 6.8% 5.9% 839 683
    Student loan 4.4% 9.4% 548 1,080
    Other 3.4% 2.8% 422 317
    Total 100% 100% 12,372 11,521

    Source: FRBNY Consumer Credit Panel/Equifax.

    This rise in student loan debt is particularly troubling since it is the only category of loans where delinquencies are also increasing. Figure 2 shows that in the aftermath of the recession, serious delinquencies—balances being 90 days or more in arrears—in mortgages, revolving home equity loans, auto loans, and credit cards have fallen, but only credit card delinquencies are near their prerecession levels. Balance figures that show rising delinquencies in student loans confirm the findings of the Department of Education, which calculated that the three-year default rate rose from 13.4 percent for FY 2009 to 14.7 percent for FY 2010 in federal student loans.2

    Figure 2. Percent of balance 90+ days delinquent by loan type

    With lenders of all types requiring higher credit standards, the rising delinquencies of student loans, most of which are made to those just starting their careers,3 may have serious repercussions not only for the individuals impacted, but for economic growth going forward, as these individuals are limited in their ability to finance major purchases.

    Credits

    Written by: Patricia Buckley

    Endnotes
      1. New York Federal Reserve, Quarterly report on household debt and credit, February 2014, http://www.newyorkfed.org/householdcredit/2013-Q4/HHDC_2013Q4.pdf. View in article
      2. Department of Education, “Default rates continue to rise for federal student loans,” September 30, 2013, https://www.ed.gov/news/press-releases/default-rates-continue-rise-federal-student-loans. View in article
      3. One-third of student loan balances are held by those under the age of 30, and over 40 percent of 25-year-olds have some student debt (Donghoon Lee, “Household debt and credit: Student debt presentation," February 28, 2013, http://www.newyorkfed.org/newsevents/mediaadvisory/2013/Lee022813.pdf). View in article
    Show moreShow less

    Topics in this article

    Behind the Numbers , Economics

    Deloitte Consulting

    Learn more
    Download Subscribe

    Related

    img Trending

    Interactive 3 days ago

    Patricia Buckley

    Patricia Buckley

    Director | Deloitte Services LP

    Patricia, Deloitte Services LP, is the managing director for Economics with responsibility for contributing to Deloitte’s Eminence Practice with a focus on economic policy. She regularly briefs members of Deloitte’s executive leadership team on changes to the US economic outlook and is responsible for the US chapter of Deloitte’s quarterly Global Economic Outlook and produces “Issues by the Numbers,” a data-driven examination of important economic policy issues.

    • pabuckley@deloitte.com
    • +1 703 254 3958

    Share article highlights

    See something interesting? Simply select text and choose how to share it:

    Email a customized link that shows your highlighted text.
    Copy a customized link that shows your highlighted text.
    Copy your highlighted text.

    Household debt has been saved

    Household debt has been removed

    An Article Titled Household debt already exists in Saved items

     
    Forgot password

    To stay logged in, change your functional cookie settings.

    OR

    Social login not available on Microsoft Edge browser at this time.

    Connect Accounts

    Connect your social accounts

    This is the first time you have logged in with a social network.

    You have previously logged in with a different account. To link your accounts, please re-authenticate.

    Log in with an existing social network:

    To connect with your existing account, please enter your password:

    OR

    Log in with an existing site account:

    To connect with your existing account, please enter your password:

    Forgot password

    Subscribe

    to receive more business insights, analysis, and perspectives from Deloitte Insights
    ✓ Link copied to clipboard
    • Contact us
    • Search Jobs
    • Submit RFP
    Follow Deloitte Insights:
    Global office directory Office locations
    XE-EN Location: XE-English  
    About Deloitte
    • Newsroom
    • Deloitte events
    • Our blog collections
    • Press releases
    • Press contacts
    • Corporate Responsibility & Sustainability
    • Report an ethics complaint
    Services
    • Audit & Assurance
    • Consulting
    • Financial Advisory
    • Risk Advisory
    • Tax
    • Deloitte Private
    • Legal
    • Sustainability
    Industries
    • Consumer
    • Energy, Resources & Industrials
    • Financial Services
    • Government & Public Services
    • Life Sciences & Health Care
    • MENA Sovereign Wealth Funds
    • Technology, Media & Telecommunications
    Careers
    • Job Search
    • Students
    • Experienced Hires
    • Executives
    • Life at Deloitte
    • Alumni
    • Diversity and Inclusion
    • About Deloitte
    • About Deloitte in the Middle East
    • Privacy
    • Terms of use
    • Cookies
    • Avature Privacy

    © 2022. See Terms of Use for more information.

    Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see About Deloitte to learn more about our global network of member firms.