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Total U.S. household debt increased by $193 billion — a 1.4 percentage point increase — to $14.15 trillion in the fourth quarter of 2019, according to latest Federal Reserve Bank of New York data.
Debt levels have been steadily rising for more than five years. And within the last few months of 2019, some types of debt saw marked increases.
- Mortgage debt (the largest contributor to household debt) rose $120 billion to $9.56 trillion
- Auto loan debt rose $16 billion to $1.33 trillion
- Credit card debt was up $46 billion to $930 billion
This fourth-quarter data also revealed that U.S. consumer delinquencies, or the percentage of people who couldn’t repay their loans, rose compared to the third quarter.
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There were a few other notable changes in the report.
- Due to an increase in mortgage refinancing, originations rose by 42% within the fourth quarter of 2019 to $752 billion — the highest level since the fourth quarter of 2005.
- New mortgage borrowers have maintained strong credit, with a median credit score of 770 — a five-point increase from the third quarter of 2019.
- Student loan debt rose $10 billion from the third quarter of 2019 to $1.51 trillion within the fourth quarter of 2019.
Banks are concerned with borrowers’ ability to repay debt and are tightening some lending standards — especially for credit cards and auto loans, according to recent responses from a Federal Reserve Bank of New York survey of senior loan officers.
Lenders expressed concerns about how most types of loans might perform in 2020 — and extending credit to borrowers they don’t consider to have prime credit.
Still, the economy is doing fairly well by other measures. In its latest statement released in January this year, the Federal Reserve noted that economic activity is growing at a “moderate” rate and job growth has been “solid” within recent months.
Based on the latest data on U.S. household debt and news that banks have begun tightening lending standards for certain forms of credit, it might be more difficult for some to get a credit card or auto loan within the next few months.
Before applying for a credit card or auto loan, it’s wise to …