Household debt surges by $601billion in 2019 to $14TRILLION – the biggest increase in more than a decade as mortgage borrowing and credit card spending soars
- Borrowing by American households reached a record high of $14.15trillion
- The rise of $601billion is the biggest yearly increase in 12 years
- Mortgage borrowing is responsible for most of the total overall level of household debt as property buyers keep taking advantage of low interest rates
- Fed issues a warning as young people struggle to keep up payments , with 4.3 percent of credit card holders between 18 and 29 were delinquent in 2019
Borrowing by American households surged by $601billion in 2019 in the biggest increase seen since the year leading up to the financial crash 12 years ago.
Spending rose across a range of areas – but fears have been raised over the amount of young people struggling to keep up with credit card repayments.
The record high of $14.15trillion marks the highest level of household debt since the 2008 crash and the biggest yearly gain since its onset in 2007 when there was a rise of just over $1trillion, new figures released by the Federal Reserve Bank reveal.
The record high of $14.15trillion in US household debt marks the highest level the 2008 financial crash and the biggest yearly gain since the year leading up to it in 2007
Spending rose across a range of areas and fears have been raised over the amount of young people struggling to keep up with credit card repayments
The growth last year was fueled by homebuyers taking advantage of low interest rates, according to the report released on Tuesday, with mortgage balances rising by $433billion from the fourth quarter of 2018 to $9.56trillion.
The jump meant new home loans have reached the highest volume since the fourth quarter of 2005.
Credit card borrowing rose by $57billion as the New York Fed warned that borrowers were falling behind on their payments.
Young people are disproportionately more likely to have credit cards as their main form of debt, the Fed has warned
About 4.3 percent of credit card holders between 18 and 29 years old were delinquent in 2019, while the rate was 2.8 percent for people between the ages of 30 and 39, the report said.
‘Younger borrowers, who are disproportionately likely to have credit cards and student loans as their primary form of debt, struggle more than others with on-time repayment,’ New York Fed researchers said.
Student loans increased by $51 billion to $1.51 trillion, with 9.21 percent past due by 90 days or more. Auto loan debt reached $57billion, according to the Fed.
The number of people being declared bankrupt rose to 202,000 from 195,000 in 2018.
The Federal Reserve cut the benchmark lending rate three times last year to try to shore up economic growth, with the last cut in October taking it down to 1.5-1.75 percent, which continued to bring homebuyers into the market.