Household debt grows at fastest pace in six years

|By:, SA News Editor

Household debt rose by $241B, or 2.1%, in Q4 to $11.52T, a NY Fed report shows, with the increase the highest since Q3 2007 - just before the great recession started.

On year, debt climbed by $180B, the first year-on-year rise since late 2008, although the figure is still 9% below its peak of $12.7T in Q3 2008.

In the last quarter, mortgages rose by $16B on year to $8.05T following four consecutive years of declines. Other household debt includes credit cards, and auto and student loans.

The growth in debt can be explained by the improving economy and job market, and banks relaxing the lending rules.

Retail analyst David Strasser is skeptical about what the figures mean. "The problem is you're not seeing job growth; you're not seeing wage growth," Strasser says. "We're still over-leveraged by any historical measure."