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A Quick Look at Mortgage Debt & Non-Mortgage Debt

Debt-Mortgage-vs-Non-MortgageAt last count, the average consumer had $25,163 of non-mortgage household debt.¹

The average household carried an additional $74,667 in mortgage debt.²

Revolving credit has been a primary driver in overall indebtedness levels, jumping 17.5% year-over-year (as of the most recent figures from TransUnion).

Mortgage credit rose 7.6% annually over a similar timeframe. CIBC says that figure is closer to 7% now, and is estimated at 5% for 2011.

Change-in-Mortgages-OutstandingLooking forward, the growth rate for mortgage debt will slow as home prices moderate and interest rates climb. The government’s new mortgage restrictions will curb volume even more.

CIBC says, “We expect that the move to shorten amortization from 35 years to 30 years will cut the growth in mortgage originations by 2-3 percentage points in the coming 12 months.”

As for non-mortgage credit, it’s “already decelerating,” says CIBC economist Ben Tal. Unfortunately, the new debt consolidation limits (i.e., the government’s new 85% LTV cap on refinances) could prop up consumer credit levels until rates resume rising.

¹ Source: TransUnion as of third quarter 2010. Non-mortgage debt is primarily car loans, with credit card purchases a distant second.

² Source: CAAMP as of August 2010. Household mortgage debt = $1.008 trillion in mortgage credit / 13.5 million households. This includes households that have no mortgage.

Chart source:  CIBC World Markets

Rob McLister, CMT