Overall Household Debt Continues to Rise

Published on: 08/15/18 1:40 PM

Category: Uncategorised

Despite a strong economy and expected rising interest rates, the amount of money borrowed by Americans continues to climb.

A Tuesday report by the New York Federal Reserve shows that American household borrowing rose to $13.29 trillion in the second quarter of 2018. This amount is up $454 billion from last year at the same time. The quarterly report demonstrates that this is the 16th consecutive quarter of increases. As in years past, mortgage balances make up the largest portion of the debt, clocking in at $9 trillion. This figure is up $80 billion from the last report released in the first quarter of 2018 and up $308 billion from one year ago, indicating that it is not likely to slow down significantly for the next quarter.

Non-housing debt came in at higher percentages than ever before, showing that mortgage debt was not the only figure driving up the overall numbers. Loans on automobiles continued their upward trend, now totalling $1.24 trillion after posting a $9 billion increase in the second quarter. This increase marked the sixth year in a row that car loan debt has increased across the nation as a whole.

Credit card debt also showed modest increases, climbing $14 billion in the quarter to reach a total sum of $829 billion. The total increase from this time last year on credit card debt was $45 billion. Student loan debt also did not escape unscathed, growing $1.41 trillion in the second quarter. This figure is up $61 billion from the prior year. The delinquency rate on student loans remains the highest of any sector of debt, followed by credit cards.

Despite the rise in debt levels, overall delinquency rates did not change. Overall rates on seriously delinquent loans, or those that are 90 past their due date, did not change from the first quarter. This rate has hovered at 2.3 percent for the entire year, indicating stability in the labor market and increased participation in federal repayment plans.

Financial experts predict that the Fed will continue to raise interest rates, with at least one more hike likely for the year. As rates rise and borrowing becomes more costly, overall national debt levels will likely trend downward.

The DXY-dollar continues to trend upward despite Tuesday’s debt report. Although the news is not expected to have a significant impact on the stock market for the day, officials caution that consumers and government officials should not take the news of rising debt lightly.