The country’s love affair – public and private – continues. The national debt balloons by $2 billion every day, while consumers keeping drowning in red ink. Is there any reprieve in sight?
The Federal Reserve Bank of New York is out with a new report that shows U.S. households added $92 billion of debt in the third quarter, driven by mortgage loans. Overall private debt levels are at an all-time high of $13.95 trillion.
Mortgage debt climbed by $31 billion, followed by student loans ($20 billion), auto loans ($18 billion), and credit card balances ($13 billion).
“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.”
The fascinating part of the report is the rising number of households falling behind on their debt payments.
According to the FRBNY, the aggregate delinquency rate rose from 4.4 percent in the second quarter to 4.8 percent in the third quarter. And three percent of loans were in serious delinquency. Student loan delinquencies led the way with 10.5 percent.
Debt – public and private – will be a huge factor in the next recession.
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