below the highest quartile declined, while that of the highest quartile increased from about 40 percent to 70 percent. this suggests that lenders were far more selective in their underwriting standards for mortgages than they had been in the period between 2000 and 2006. many of these powerful forces of demand and supply that together led to the decline in household borrowing, and hence to the fall - off in resources available for consumption, have either diminished or slowly reversed as the economic recovery that began in 2009 has continued. first, equity values, which dropped 51 % between october 2007 and march 2009, as measured by the s & p 500 index, have recovered significantly, rising by almost 140 % percent through the end of 2013 chart 8 ( stock market wealth also fell sharply, 2nd half ). in addition, as seen in chart 9 ( house prices peaked and fell precipitously, 2nd half ) house prices have finally begun to recover, and have been doing so on a broad geographical basis. house prices are up 21 percent since their nadir in 2011. this has helped restore owners ’ equity in their homes chart 10 ( result was a huge decline in owners ’ equity in hh re, 2nd half ). in sum, as seen in chart 11 ( household net worth ), aggregate household wealth has recovered substantially as a percent of disposable income, albeit with a lesser contribution from housing and a greater contribution from corporate equities. at roughly the same time, starting in 2011, we ’ ve seen a substantial loosening in nonmortgage lending standards by banks, an important sign of normalization in credit markets, as chart 12 ( standards have loosened since 2011 on non - mortgage products ) suggests. perhaps not surprisingly, mortgage standards have only in recent quarters begun very slowly to reverse the significant tightening that followed the housing bust ; see chart 13 ( banks and lenders imposed tighter mortgage lending standards, 2nd half ). broad increases in wealth, continued recovery in the overall economy with higher levels of employment and income, a relaxation of credit standards, and historically low interest rates have led to improvements in delinquency rates and increases in both demand and supply for borrowing by u. s. households. in 2013, we see the consequent increase in household debt. in the last quarter of 2013, aggregate consumer debt increased by $ 241 billion, the largest quarter - to - quarter increase since 2007. more importantly, as shown in chart 14 ( total debt balance and its

paydown. second, the growth in educational debt, like that of auto loans, is concentrated among the lower and middle credit - score groups. unlike other types of loans, student debt continued to grow steadily during and after the recession ; now, at almost $ 1. 1 trillion, it comprises 9 percent of household debt and represents the second largest source of debt for u. s. households after mortgages. student loans provide critical access to schooling, given the challenge presented by the increasing costs of higher education. those with college degrees earn a high return on their educations ; they are much less likely to be unemployed, and they earn on average twice as much as those with only high school diplomas. our research indicates that the large growth in student debt, and an associated high level of student debt delinquencies, has been associated with a reduction in mortgage and auto loan borrowing among younger people. while younger individuals were previously much more likely to finance home and car purchases by age thirty, chart 16 ( proportion of borrowers with home - secured debt at age 30 ) shows that those with student debt are now less likely to do so than those with no student debt, as shown by brown and caldwell in a liberty street economics blog post in 2013. 5 in fact, our research suggests that student debt appears to have replaced or crowded out other types of debt, so that the difference in average total debt held by student - loan and non - student - loan borrowers has remained stable over time. we suspect that this decline in taking on other types of debt by student - loan borrowers partly reflects increased uncertainty about the future. however, in addition to a possibly reduced meta brown and sydnee caldwell ( 2013 ), young student loan borrowers retreat from housing and auto markets federal reserve bank of new york, liberty street economics blog, april. bis central bankers ’ speeches appetite for borrowing, a reduction in access to credit is also likely to play an important role, despite the comparatively high earning potential of those with a college education. consumers with substantial student debt may not be able to meet the stricter debt - to - income ( dti ) ratio standards that are now being applied by lenders, particularly on mortgage loans. we believe that student debt growth among new graduates has been higher in the most recent years than growth in their incomes. in addition, delinquency in repayment has become more prevalent among student borrowers, and those with past delinquencies are likely to find