Connect with us

Breaking News

Household Debt Rises to $14.6 Trillion Due to Increase in Mortgage Loans



Person doing finances-Household Debt Rises to $14.6 Trillion Due to Increase in Mortgage Loans-ss-Featured

By the end of 2020, total consumer debt saw an increase to almost $14.6 trillion. It has been pushed by an increase in housing market mortgage loans that can be considered record breaking, according to a Federal Reserve report that was published on Wednesday.

For Q4 of 2020, debt rose by 1.4%, which represents another $206 billion. This came as households used low interest rates and the monetary stimulus to their advantage.

For the first time, mortgage debt went over $10 trillion, rising at the fastest rate in Q4 since 2006. There has also been a quarterly increase of $182 billion. It peaked in a year when homeowners decided to use low rates to refinance to their advantage. This comes as people living in the city decided to move to the suburbs while a shift in housing continues due to the pandemic.

Last year, total household debt increased by $414 billion. Meanwhile, a shift from getting loans for automobiles and education into financing mortgages took place. In 2020, mortgage debt rose to $486 billion. Conversely, student loans only rose by $47 billion while automobile debt only rose by $43 billion. Additionally, credit card debt fell in 2020 by $108 billion.

Low interest rates and the holding back of mortgage guidelines that keep delinquencies in check served as the two main tailwinds of people borrowing money in 2020.

If a person doesn’t pay debt 90 days more past the deadline, it is considered “serious delinquency.” For mortgage debt in Q4 2020, this was at 0.65%, which is less compared to the 1.1% rate in Q4 2019. Meanwhile, the rate of delinquency in terms of student loan debt went from 9.21% in 2019 to 2.76% in 2020.

Overall, the serious delinquency rate for all forms of debt decreased to 1.25% last year from 2.36% in 2019.

Up Next:

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published.


Will You Vote For President Trump
Everstryke Match Ad

Copyright © 2022 Breaking News Alerts. This copyrighted material may not be republished without express permission. The information presented here is for general educational purposes only. MATERIAL CONNECTION DISCLOSURE: You should assume that this website has an affiliate relationship and/or another material connection to the persons or businesses mentioned in or linked to from this page and may receive commissions from purchases you make on subsequent web sites. You should not rely solely on information contained in this email to evaluate the product or service being endorsed. Always exercise due diligence before purchasing any product or service. This website contains advertisements.