U.S Household Debt Skyrocket In Q2

Federal Reserve Bank of New York said US household debt to increase by $313 billion, or 2.1% to $14.96 trillion in the second quarter.

Gatekeepers News reports that the debt increase was due to a surge in credit card spending and home purchases.

According to the report, American consumers got $14.96 trillion in debt at the end of June, the biggest pile of bills on record and $812 billion more than what was owed at the end of 2019, before the COVID-19 pandemic.

Credit card balances grew by $17 billion in the second quarter, but they remain $140 billion below levels at the end of 2019. Auto loan balances increased by $33 billion.

Gatekeepers News gathered that Mortgage debt, the single biggest contributor to overall household debt, rose $282 billion to $10.44 trillion.

About 44 percent of the outstanding balances were originated over the past year, accounting for both new mortgages and refinancings.

Administrator of the Center of Microeconomic Data at the New York Fed., Joelle Scally noted that even though the U.S housing market is red hot and borrowing to purchase homes is through the roof, “there are still 2 million borrowers in mortgage forbearance who are vulnerable to financial distress once the forbearance programs come to an end.”

Meanwhile student loans, the only debt category that declined last quarter — falling to $14 billion — are mostly still covered by forbearance programs under the CARES Act.