U.S. Household Debt Reaches New Record of More than $14 Trillion
According to the Federal Reserve Bank of New York, overall household debt rose to $14.15 trillion in 2019, setting a new record. Driven by an increase in mortgage loans and credit card debt, Americans added $193 billion of debt during the fourth quarter of last year.
Wilbert Van Der Klaauw, senior vice president of the New York Fed, said in a statement that “mortgage originations, including refinances, increased significantly in the final quarter of 2019.” Mortgage balances rose to $9.56 trillion, and originations rose to $752 billion in the fourth quarter, which is the highest volume since the fourth quarter of 2005.
The report also found that student loans increased by $10 billion, although this sector of borrowing grew at a faster pace in 2014. However, the total outstanding student loan debt of $1.51 trillion could be serving as a barrier to many young consumers hoping to build credit.
Though credit card debt typically increases during the fourth quarter due to holiday shopping, researchers found that the $46 billion increase was larger than normal. Van Der Klaauw stated that “transitions into delinquency among credit card borrowers have steadily risen since 2016, notably among young borrowers.”
New York Fed economists infer that rising rates of delinquencies from young borrowers are likely related to rising student loan debt. In an interview, Van Der Klaauw said that “it could also be that the economy is very strong overall but there are some subgroups, and maybe young people in particular, who are not benefiting as much from that.”