US Household Debt Surpasses $14T For The First Time In History

Americans struggle with the concept of delayed gratification and that’s one of the main reasons why they have a reputation for spending money they don’t have. The recent report from the Federal Reserve Bank of New York shows that Americans have continued to increase their debts for the 22^nd straight quarter. 

The total household debt in the U.S went up by $601 billion during the fourth quarter of last year which is a 1.4 percent increase when compared year on year. This is also the first time in U.S history that the total debt has surpassed $14 trillion. The previous highest debt recorded was back in 2008 as the recession kicked in. This new spike in household debt is $1.5 trillion more than the spike in 2008.

Mortgage borrowing saw a rise as it went up by $120 billion to reach $9.56 trillion. One of the reasons for this is because the mortgage rates have dropped which has encouraged more Americans to take the decision to take out a mortgage and buy a home. The mortgage rate on a 30 year loan has now dropped by nearly 100 points in the last 12 months. Just to put this into perspective, an American who takes out a $500,000 loan for a 30 year period, will now have to pay about $300 less each month.

This attractive proposition to taking out a mortgage can be sent in the 18 to 29 demographic. This age group has witnessed a massive spike in mortgage loans and has now surpassed the last major spike which was back in 2007. 

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Total Debt Continues To Increase

Whether it is mortgage debt, student debt or credit card debt, Americans have continued to pile on the loans. Student debt which stood at $1.46 trillion towards the end of 2018 has now climbed to $1.51 trillion. What is interesting to note here is over $100 billion in student debt falls on the shoulders of people who are over 60 years.

Credit card debt which is one of the most common ways for Americans to get into debt has risen by $930 billion. Credit card delinquencies also witnessed an 18 month high as they went up by 8.36 percent. Auto debt which has grown for the last 35 quarters in a stretch continued to increase and has now gone up by $16 billion from the last quarter.