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September marks the tenth anniversary of the bankruptcy of Lehman Brothers, which is widely regarded as the beginning of the financial crisis in the United States.
In other words, the financial crisis has changed a lot and consumer debt is no exception. We all know that excessive debt, especially mortgages, has been one of the main causes of the near-collapse of the financial sector 10 years ago. Here's how things have changed with mortgages and other major types of consumer debt.
Source of the image: Getty Images.
The overall view
According to a new LendingTree report, consumer debt has changed considerably over the last decade since the financial crisis. Here is a brief overview of the evolution of the total balances of different types of consumer debt.
|
Type of consumer debt |
2008 Total |
2018 Total |
% Change |
|---|---|---|---|
|
mortgages |
$ 10.7 trillion |
$ 10.1 trillion |
(5.6%) |
|
Auto loans |
$ 798 billion |
$ 1.13 trillion |
41.6% |
|
Credit card |
$ 986 billion |
$ 1.1 trillion |
1.4% |
|
Student loans |
$ 627 billion |
$ 1.53 trillion |
144% |
|
Personal loans |
208 billion dollars |
186 billion dollars |
(10.6%) |
|
Total |
$ 13.32 billion |
$ 13.95 billion |
4.7% |
Data source: LendingTree.
As you can see, the overall debt of Americans has not changed dramatically. In fact, it may be surprising that Americans now need nearly 5% more that they did it at the beginning of the Great Recession.
In addition, history is not limited to numbers. Here is an overview of each of the major categories of consumer debt and how they have changed over the last decade.
mortgages
Not surprisingly, total mortgage debt is lower than in 2008. Not only are housing prices in some of the hardest-hit markets still lower than their pre-crisis peaks, but banks are far it is prudent to lend money to buy houses.
Specifically, products such as the infamous NINJA loans (no income, no jobs or assets) are a thing of the past, and although it is still possible to buy a house with a small down payment, your income and your credit must demonstrate your ability. and the probability of repaying the mortgage.
Here is a statistic that summarizes how the mortgage market has changed: In 2018, mortgage rates represent about 68% of income. In 2008, this metric was close to 100%.
Auto loans
Auto loan balances have risen nearly 42% over the last decade, thanks to a trio of catalysts. First, the average selling price of a new vehicle has risen from around $ 28,350 in 2008 to $ 36,113 at the end of 2017. Second, buyers are financing their vehicles over longer periods. The average car loan is now 69.5 months, about half a year longer than in the Great Recession. Finally, the high-risk auto market has grown dramatically.
While the sub-prime mortgage market has declined significantly over the past decade, the opposite is true for the auto loan industry. In fact, about a quarter of auto loans are currently granted to high-risk or high-risk credit buyers.
Credit card
Since the beginning of the financial crisis, credit card balances have declined, but have since recovered. In fact, between the end of 2008 and the beginning of 2013, credit card balances declined by more than 21%. However, with the rebound in the economy, consumers seem to have regained confidence in their ability to pay off their credit card debt because Americans owe a little more than before the financial crisis.
Student loans
Here's the real reason Americans need more money now than at the start of the Great Recession: Student debt has increased 144% over the last decade as tuition fees have increased. In fact, excluding student loan debt, the overall indebtedness of Americans would have fall from about 300 billion since.
To be fair, student loan debt is usually a better form of debt than a high-interest credit card or mortgage debt that you did not have in the first place. However, it is remarkable that over the past decade, student loan debt has moved from being the fourth largest after mortgages.
The takeaway dish
In the last decade, mortgages have become much more responsible, while auto loans have taken the opposite direction in many ways. In addition, student loan debt has become more of a burden to Americans than their credit card balances. While the amount The debt of the Americans has not changed dramatically over the last decade, the nature of the debt has undergone a considerable transformation.
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