US Household Debt Reaches $14.6 Trillion, Highest Since 2007
US household debt rose to its highest levels in 14 years during the second quarter of 2021. Thanks to a surge in the housing market, the total collective debt of American households reached $14.6 trillion. This is according to a Federal Reserve report issued Tuesday.
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US Household Debt Posts Sharpest Rise Since 2007
During the period covering April to June, total debt balances rose by $313 billion. This is the sharpest rise in the second quarter of 2007. As a share of debt, the increase came out to 2.1%, which is the fastest rate since the fourth quarter of 2013.
Most of the piled-on debts came from mortgage originations. This consisted of both initial purchases and refinances. Demand for housing as well as refinancing jumped when the Federal Reserve decided to keep benchmark borrowing rates at historic near-zero levels.
Mortgage Balances and Non-Housing Debt Increase
In addition, mortgage balances increased by $282 billion from April to June. This is a 2.8% increase compared to January to March 2021. It also meant a 6.7% increase from a year ago, totaling $10.4 trillion. In addition, mortgage originations totaled near $4.6 trillion, which amounts to almost 44% of all outstanding balances for home loans.
Outside of home purchases, non-housing balances totaled $44 billion. Credit card balances went up by $17 billion. Meanwhile, automobile financing also rose as attractive deals came with low-interest rates.
As a result, auto loans went up by $33 billion. A notable decrease in debt totals was for student loans. With forbearance programs in effect, education loan balances went down by $14 billion to $1.57 trillion.
Loan Delinquency Rates Down As Well
Meanwhile, the plethora of government programs aimed to keep Americans afloat during the pandemic worked. Consequently, delinquency rates across the board dropped. Only about 2.7% of total debt is delinquent, which means a 2% drop from the pre-pandemic fourth quarter of 2019.
However, experts warned that many federal programs that helped shield Americans from creditors are now slowly phasing out. This means many will begin facing mounting pressure to resume payments.
Joelle Scally, administrator of the Center for Microeconomic Data at the New York Federal Reserve issued a statement. “We have seen a very robust pace of originations over the last four quarters with new extensions of credit for mortgages and auto loans combined with rebounding demand for credit card borrowing.
However, there are still two million borrowers in mortgage forbearance who are vulnerable to financial distress once the forbearance programs come to an end.”
Housing Loan Availers Have High Credit Ratings
Thankfully, the credit quality of housing loans available remains high. The median credit score for new housing loans is 760. During this period, around 71% of all home loan borrowers have a score of over 760.
Meanwhile, the share of mortgages moving to delinquency totaled just 0.4%, which is a record low. In addition, unpaid mortgages that are 90 days or more past due also set a record low at 0.5%. This is thanks to the ongoing forbearance programs.
Watch the Yahoo Finance video reporting that households boost borrowing amid COVID-19 recovery with largest increases in debt balances since 2007:
What do you think about the increasing US household debt? With the economy stalling yet again due to a resurgence of the virus, do you expect many Americans to default? Or do you see a healthier economy rising as more and more people get jobs?
Let us know what you think. Share your thoughts below.
Folks the housing bubble burst of 2008 will look like nothing compared to what is coming. Americans have become so clueless about everything and instead of digging in and paying off debt as quickly as possible in this crazy inflated false economy they instead run out and spend like crazy. We are in real trouble as a Country and it is pathetic how easily we are letting the country crash & burn in today’s Marxist times.
I really think we over 60 that barley make it, some not being able to medicine, groceries or both. Our poor very elderly upset not understanding why we only got 600.00 then 1300.00. On which we paid on credit cards due to having everything delivered. Everything rising food that only last a couple days, gas all the down to clothes with many less threads much thi net made. This is the USA “THE RICHIST COUNTRY”, BUT THE ONLY ONE THAT CAN’T HELP THE CLOSE TO MIDDLE CLASS. OUR GRANDKIDS CAN’T AFFORD TO GO TO COLLEGE NOR BUY A HOME, OR CORPORATE MEDICAL IS AWFUL EVEN WHEN MY 88 YEAR OLF FATHER HAS ALMOST 500.00 COME OUT OF HIS SAVINGS FOR BLUE CROSS/BLUE SHIELD, BUT THEN ALL OTHER COUNTRIES HAVE FREE MEDICAL AND DON’T PAY FOR AN EDUCATION. WHY WHY CAN’T I AFFORD TO LIVE IN THE STATE I WAS BORN ABD RAISED….CA SAD VERY UPSETTING IN DID. IN ADDION THE NEWS CONTINUES TO BE CONCERNED WITH PAIN PILL ADDICTIONS YET FENYTINOL IS LEGAL ONLY IN?????!!
YOU GUESSED THE USA. I CRY EVERY SINGLE DAY WONDERING WHERE IT IS I AM. OUR GOVERNMENT WORKS FOR US NOT THE OTHER WAY AROUND.
Unfortunately, the U.S. government no longer works for the American people.. They work for themselves, communist China, the super-rich, big tech & illegals.
Their philosophy in 2021 is “America Last”.
I am a disabled retired widower and this has to be the worst so far I have ever experienced. Medicine, grocery, and trying to pay for people to deliver all I need is ridiculous. It is awful to where I am trying to find a part time job doing whatever I can to accommodate my living. Praying the government will assist us that has no other way to live.
Actually, you can answer with any of the choices. All will occur in sequence as time goes by. Don’t let yourself be surprised by the Biden Administration’s continuation of the “Covid Crisis” to push his popularity and the Democrat narrative of social change necessity. Personal debt relief will be the next moratorium as more sporadic “geographically partial” shutdowns occur throughout next winter/spring while the courts refuse to process collections.
With the way many people have used rent moratoriums to accumulate wealth from earned wages and government gift checks to build cash reserves and transfer themselves into the home ownership market while leaving their past due rents unpaid as a pattern to follow, look forward to seeing debt defaults be blocked for many months. The lending industry will have to build unrecoverable losses into their future interest rates in order to survive. We’re watching this phenomenon partially drive the general inflation in commodity pricing. The same will happen with future intangibles market items as personal responsibility continues to erode without penalties within American society.
ONLY WAY TO FIX OUR COUNTRY IS——————-“” TERM LIMITS “” ALL of our politicians are money hungry and power crazy. They have ALL lost interest in the taxpayers of this county and only worry about making money for themselves. TERM LIMITS will help fix the problem. SO———VOTE ALL CURRENT POLITICIANS OUT EACH ELECTION
Some truth in all comments. There’s no good news except for the corrupt politicians and big tech/pharma that run the show. Beware all you uninformed fools… even Rome fell!
If people continue to vote for politicians who tell you very clearly that they are going tax you more for everything and alow illegals into our country by the millions it says one thing they for themselves!
Stop voting for democrats who are only interested in power and money for themselves and want to destroy our country with socialism and marxism
We must come together people and save our country from these evil democrats and help save our great country!
Vote RED IN 2022