NY Fed: Household Debt Nears $15T Amid Rise In Mortgage, Auto Loan Originations

Household debt increased by $313 billion (2.1 percent) in the second quarter of 2021, hitting a total of $14.96 trillion, according to information from the Federal Reserve Bank of New York’s Center for Microeconomic Data, which was released on Tuesday (Aug. 3).

The total debt balance is now $812 billion higher than at the end of 2019. In addition, the 2.1 percent rise in aggregate balances was the biggest increase since the fourth quarter of 2013. It is also the biggest nominal increase in debt owed since the second quarter of 2007, per the report. Mortgage balances increased by $282 billion to stand at $10.44 trillion at June’s end.

See also: Fed Report: Mortgage Debt Surges, Consumer Credit On The Mend

Credit card balances are up $17 billion and auto loans were up $33 billion. Student loan debt dropped $14 billion due to forbearance programs. In all, non-housing liabilities, which encompass credit cards, auto loans, student loans and other debts, are up $44 billion.

“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,” said Joelle Scally, administrator of the Center for Microeconomic Data at the New York Fed. “However, there are still two million borrowers in mortgage forbearance who are vulnerable to financial distress once the forbearance programs come to an end.”

According to the report, there was $1.22 trillion in newly originated mortgage debt in the second quarter of this year. Seventy-one percent of that debt was originated to borrowers with credit scores exceeding 760. Additionally, the proportion of mortgage balances late 90+days dropped to 0.5 percent, marking “a historic low as forbearance remains an option and foreclosures are mostly on hold.”

Data for the Fed’s report is culled from the New York Fed’s Consumer Credit Panel, which is a “nationally representative random sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data.”