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Is it a good thing mortgage debt levels are rising again?

At first glance it looks like America is ready

The Federal Reserve Bank Of New York released its latest Household Debt and Credit Report.

America's household debt increased $241 billion in the fourth quarter of 2013, from the previous quarter, the largest quarter-over-quarter increase since the third quarter of 2007.

The increase is led primarily by a 1.9% increase in mortgage debt, equal to $152 billion.

In Q4 2013 total household indebtedness increased 2.1% quarterly, to $11.52 trillion; 2.1% higher than the previous quarter. 

Overall household debt remains 9.1% below the peak of $12.68 trillion in Q3 2008.

“This quarter is the first time since before the Great Recession that household debt has increased over its year-ago levels suggesting that after a long period of deleveraging, households are borrowing again,” said Wilbert van der Klaauw, senior vice president and economist at the New York Fed.   

But this is a good thing for debt levels in the sense that borrowers, for now, can handle it.

90+ day delinquency rates are down across the board for mortgages, HELOCs and student loans. The rate is flat for auto loans and slightly higher for credit cards.

The Fed numbers are surveyed anonymously using Equifax data. And it runs in line with the S&P Dow Jones Indices.

Those numbers  found national default rates during January also declined as the national composite reached 1.34%, a marginal decline from 1.35% in December and 1.63% last year.

What's more, the American consumer is running on empty. Without wage growth, the level of disposable income will continue to decline. This could lead to more borrowing, but not in a good way, as the one category where delinquences are rising are in the credit card asset class.

Americans might not be ready for more debt, after all.

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