Total household debt rose in the second quarter due, in large part, to mortgage balances, according to a new report published by the Federal Reserve Bank of New York’s Center for Microeconomic Data.
During the second quarter, total household debt increased by $192 billion, or 1.4 percent, to $13.86 trillion. This marked the 20th consecutive quarter with an increase in household debt and created a new peak level–the earlier peak of $12.68 trillion was recorded in the third quarter of 2008.
Mortgage balances were the single greatest of household debt during the second quarter, increasing by $162 billion to $9.4 trillion. This also created a new peak, surpassing the high of $9.3 trillion in the third quarter of 2008. Mortgage originations, which include refinances, increased by $130 billion to $474 billion, the highest volume since the third quarter of 2017.
However, mortgage delinquencies were on the decline, dropping from one percent in the first quarter to 0.9 percent in the second quarter. But while mortgage delinquencies were down, credit card delinquencies inched up by 0.2 percent to hit 5.2 percent in the second quarter.
“While nominal mortgage balances are now slightly above the previous peak seen in the third quarter of 2008, mortgage delinquencies and the average credit profile of mortgage borrowers have continued to improve,” said Wilbert van der Klaauw, senior vice president at the New York Fed. “The data suggest a more nuanced picture for other forms of household debt, with credit card delinquency rates continuing to rise.”
But that’s not to say that most people are oblivious to their debt burden, In March, a poll by Primerica Inc. of 1,000 middle-income Americans with household incomes between $29,000 and $106,000, 43 percent stated they were not saving enough for retirement. Within that respondent base, half said they didn’t make enough money to adequately set up a savings plan. The survey also found that one in three respondents said high credit card debt was their greatest financial concern, with more than half admitting they do not pay off their credit card balance every month. The average credit card debt of all respondents is nearly $3,000.
About the author