Household Debt Reached All-time High Last Year

February 12, 2020

Total debt for U.S. households has hit a record high, cresting above $14 trillion for the first time. According to the Federal Reserve Bank of New York, household debt increased by $193 billion in Q4 2019. This marks the 22nd straight quarter, or 5.5 years, that debt has increased. Debt has increased nearly 27 percent since its most recent trough in 2013 and is $1.5 trillion above the previous peak in 2008.

Mortgages drove the bulk of the new debt, as low interest rates have spurred new buyers and refinancing of existing loans.

While delinquencies for mortgages are historically low, they are on the rise for other forms of debt, particularly for young borrowers. Nearly 5 percent of auto loans are more than 90 days delinquent, the highest percentage since 2011. Credit card delinquencies increased to 8.36 percent, an 18 month high. One in nine student loan borrowers is in delinquency or default. The Fed report notes that these numbers may be understated, as nearly half of all student loans are in deferment or forbearance. When these loans reenter their normal payment cycle, the number of delinquencies and defaults is expected to double.

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