This chart from Deutsche Bank Research shows that since the financial crisis of 2008 and beyond, US households have been deleveraging their mortgage debt. This is a major reversal, and the chart shows this is the first major trend in this direction since the post-World-War-II era.
US consumer credit continues to leverage up slightly. These trends combined may explain recent news that US consumers have reached an all-time high, 700, in their average credit scores.
Scores have been bolstered in part by years of consumer wariness after the housing bubble collapsed and the U.S. plunged into the Great Recession. Those burned by the recession were more reluctant to take on significant levels of personal debt, and many opted instead to pay off existing debts and play a waiting game until conditions got better, pushing savings higher.
Our main question: does this counter-balance the strategic risk in the bubble-era asset price trends we’ve seen since 2009?