US household debt hits a record, nearing $14 trillion: NY Fed

Mortgage debt rose by $31bn to $9.44 trillion while auto, credit card, and student loan debt balances also spiked.

    Student loan borrowers from mostly African-American neighbourhoods were shown to be defaulting at nearly twice the rate of borrowers from mostly white neighbourhoods [File: Akos Stiller/Bloomberg]
    Student loan borrowers from mostly African-American neighbourhoods were shown to be defaulting at nearly twice the rate of borrowers from mostly white neighbourhoods [File: Akos Stiller/Bloomberg]

    United States households added $92bn of debt in the third quarter of 2019, led by a rise in mortgage loans, and overall debt levels set another record, nearing $14 trillion, the Federal Reserve Bank of New York said on Wednesday.

    The percentage of households behind on their debt payments also rose in the three months from July through September, the New York Fed said in its quarterly report on household debt. The aggregate delinquency rate rose to 4.8 percent from 4.4 percent in the second quarter, led by a pickup in loans in the early stages of delinquency.

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    Mortgage debt rose by $31bn to $9.44 trillion. Auto, credit card and student loan debt balances also rose.

    "New credit extensions were strong in the third quarter of 2019, with auto loan originations reaching near-record highs and mortgage originations increasing significantly year-over-year," said Donghoon Lee, research officer at the New York Fed. "The data suggest that households are taking advantage of a low-interest rate environment to secure credit."

    About three percent of loans were in serious delinquency, categorised as 90 days or more late, led by student loans. Some 10.9 percent of the record $1.5 trillion in student loan debt was in serious delinquency, up from 10.8 percent in the second quarter.

    Student loan borrowers from mostly African-American neighbourhoods were shown to be defaulting at nearly twice the rate as borrowers from mostly white neighbourhoods, the New York Fed said in a study released alongside the quarterly data. Borrowers from African-American neighborhoods also tended to carry larger debt loads.

    SOURCE: Reuters news agency