4Q2019 Report On Household Debt And Credit: Household Debt Continues To Rise; Mortgage Originations Hit 14-Year High

from the New York Fed

The New York Fed's Center for Microeconomic Data today released the Quarterly Report on Household Debt and Credit for the fourth quarter of 2019. Total household debt balances grew by $193 billion in the fourth quarter, marking a $601 billion increase in household debt balances in 2019, the largest annual gain since 2007.

The main driver was a $433 billion annual upswing in mortgage balances, also the largest since 2007. Auto loan and credit card balances both increased by a brisk $57 billion last year, while student loan balances climbed by a more muted $51 billion, well below the $114 billion increase recorded in 2013—the fastest pace of growth for the series. The source for the Quarterly Report is the New York Fed's Consumer Credit Panel—a panel data set that now spans twenty-one years, 1999-2019. The unique panel design allows us to identify new entrants to the credit market: as young people age into having credit reports and using credit products, they are "born" into the panel, enabling us to observe the credit behavior of young borrowers.

Mortgage balances—shown on consumer credit reports on December 31 stood at $9.56 trillion, a $120 billion increase from 2019Q3. Balances on home equity lines of credit (HELOC) saw a $6 billion decline, bringing the outstanding balance to $390 billion and continuing the 10-year downward trend. Non-housing balances increased by $79 billion in the fourth quarter, with increases across the board, including $16 billion in auto loans, $46 billion in credit card balances, and $10 billion in student loans.

Non-housing balances increased by $79 billion in the fourth quarter, with increases across the board, including $16 billion in auto loans, $46 billion in credit card balances, and $10 billion in student loans.

Credit cards are the most commonly used type of consumer credit—more than 60 percent of people with a credit report have at least one credit card account. Generally speaking, all types of credit are less common among those in their 20s, since they are still working to build their credit histories. But credit cards are prevalent among younger borrowers as well, with over half of individuals in their 20s showing a credit card on their credit report.

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