In the second quarter, household debt reached about $15 trillion, the highest level in 14 years

The Federal Reserve said Tuesday that household debt increased by the greatest in 14 years in the second quarter, owing primarily to a spike in the housing market, which raised the total American IOU to just shy of $15 trillion.

In the April-to-June period, total debt balances increased by $313 billion, the largest increase since the same period in 2007.

The majority of the increase came from mortgage originations, both new and refinances, which have been on fire as the Federal Reserve has held benchmark borrowing rates at historic lows.

For the quarter, mortgage balances grew $282 billion, up 2.8 percent from the first quarter and 6.7 percent from a year ago, to $10.4 trillion.

Mortgage originations have totalled close to $4.6 trillion over the last four quarters, accounting for 44 percent of all existing home loan balances. Credit card debt rose by $17 billion, while auto loans jumped by $33 billion. Student loan debt fell $14 billion to $1.57 trillion during the year, as forbearance programmes kept education-related liabilities in check.

Indeed, overall government efforts to help consumers cope with the Covid-19 outbreak led in low delinquency rates. In all, 2.7 percent of debt was delinquent, a two-percentage-point decrease over the fourth quarter of 2019, just before the pandemic struck.

However, those breaks are set to expire in the coming months, providing a problem for borrowers who must now bring their loans current.

“Over the previous four quarters, we’ve seen a fairly robust pace of originations with fresh extensions of credit for mortgages and auto loans mixed with rising demand for credit card borrowing,” Joelle Scally, administrator of the New York Fed’s Center for Microeconomic Data, said in a statement. “However, two million debtors in mortgage forbearance are still at risk of financial trouble once their forbearance programmes expire.”

Borrower credit quality has been high in the housing market, at least.

Newly originating mortgages had a median credit score of 760, with 71 percent of all borrowers having a score of over 760. During the ongoing forbearance programmes, the share of mortgages sliding into delinquency was just 0.4 percent, a new low, while the 0.5 percent share of mortgages that were 90 days or more past due also set a new high.

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