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Mortgage debt surges in fourth quarter

But market still showing signs of recovery

Mortgage debt surged in the fourth quarter of 2017 but remains far from its previous peak level, according to the Quarterly Report on Household Debt and Credit from the Federal Reserve Bank of New York’s Center for Microeconomic Data.

Overall, total household debt increased by $193 billion, or 1.5%, to $13.15 trillion in the fourth quarter of 2017, the report showed. This marks the fifth consecutive year of positive annual household debt growth.

The total growth was due to increases in mortgage debt, by 1.6%, student debt at 1.5%, auto debt at 0.7% and credit card debt at 3.2%. However, it was partially offset by a decrease in home equity line of credit balances, which decreased 0.9%.

Mortgages, of course, are the largest form of household debt, and increased by $139 billion in the fourth quarter. This was the most substantial increase in mortgage debt seen in several quarters.

The report explained that unlike overall debt balances, which surpassed their previous 2008 peak last year, mortgage debt remains 4.4% below its peak level. This low level of debt, one expert explained, shows the lingering effects of the recent housing crisis.

“Despite recovered house prices, mortgage balances remain far below their previous peaks in the states that were hardest-hit by the Great Recession,” said Donghoon Lee, New York Fed research officer. “While the subdued mortgage balance levels of these areas should not necessarily be interpreted as a negative outcome, the regional differences clearly show that the echoes of the financial crisis still linger.”

The report is based on data from the New York Fed's Consumer Credit Panel, a nationally representative sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data.

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