Thursday, February 25, 2016

Older Americans Are Deeper in Debt

Today's older Americans have more debt than their predecessors, according to a Liberty Street Economics analysis. Among borrowers aged 50 to 80, aggregate debt grew 60 percent between 2003 and 2015, while the debt of younger borrowers fell slightly during those years.

Tapping into the New York Fed's Consumer Credit Panel, which is based on Equifax credit data, the researchers examined five types of debt (mortgages, auto loans, credit cards, student loans, and home equity lines of credit) to see how balances have changed. Among borrowers aged 50 or older, the per capita balance of each type of debt except credit cards increased between 2003 and 2015. Among younger borrowers, the per capita balance of each type of debt except student loans fell during those years.

This is good news, say the researchers, because older borrowers are more likely to pay back their loans. So far there is no evidence of greater delinquency among older borrowers as their debt level has grown. The aging of the nation's borrowers is likely to mean "greater balance sheet stability" and less "credit-fueled consumption growth."

Source: Liberty Street Economics, The Graying of American Debt

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