Dive Brief:

• Consumer debt topped $12.73 trillion in Q1 2017, surpassing the previous high in Q3 2008. The growth is an indicator that Americans’ credit worthiness is returning to levels that enable them to qualify for loans and that lenders are becoming more confident, according to The New York Times.

• Of consumer debt today, 11% is student loans, compared to 5% at the 2008 peak. Mortgage debt (not including home-equity loans) took a 68% share, down from 73% in 2008. Auto loans grew from 6% of debt in 2008 to 9% today.  

• Today’s borrowers are economically healthier and more credit-worthy than they were immediately pre-crash, the Los Angeles Times reported. While delinquency rates for most debt types are low, they’re ticking upward for auto loans and credit cards and are staying high for student loans. 

Dive Insight:

Student loans continue to be a challenge for millennials, with high debt and suppressed wages equating to lengthy payoff timelines. These factors, combined with tight inventories of entry-level homes and other factors, are contributing to a delay in first-time homeownership.

A 2016 study by the National Association of Realtors found that half of respondents under the age of 35 with student loan debt aren't comfortable also having a mortgage loan. A study by Lending Tree last fall revealed that, for millennials with student loans, 11.3% of that generation's average net monthly salary — then $2,800 — goes toward repayment. 

Interestingly, it’s not just young people who are tied up in student loans: a greater percentage of older Americans have more household debt today compared to 2008, likely due to them taking on the student loan debt of their children or grandchildren.

In some markets, rising home prices are exacerbating the problem. In Q4 2016, the share of monthly income required to pay a mortgage reached 15.8%, the highest since Q2 2010.

The industry has been developing programs to help ease some millennial concerns and burdens. For example, SoFi Lending Corp. and Fannie Mae now offer an option to combine mortgage and student loans into one payment, thereby leveraging lower mortgage interest rates.

Zillow recently launched a home-search site targeting young, first-time buyers. It allows users to browse based on their preferred down payment and monthly mortgage amounts while also providing an all-in monthly price.