American households added $92 billion of debt in the third quarter, led by a rise in mortgage loans, and overall debt levels set another record, nearing $14 trillion, the Federal Reserve Bank of New York said on Wednesday.
The percentage of households behind on their debt payments also rose in the three months from July through September, the New York Fed said in its quarterly report on household debt. The aggregate delinquency rate rose to 4.8% from 4.4% in the second quarter, led by a pick-up in loans in the early stages of delinquency.
Mortgage debt rose by $31 billion to $9.44 trillion. Auto, credit card and student loan debt balances also rose.
"New credit extensions were strong in the third quarter of 2019, with auto loan originations reaching near-record highs and mortgage originations increasing significantly year-over-year," said Donghoon Lee, research officer at the New York Fed. "The data suggest that households are taking advantage of a low-interest rate environment to secure credit."
About 3% of loans were in serious delinquency, categorized as 90 days or more late, led by student loans. Some 10.9% of the record $1.5 trillion in student loan debt was in serious delinquency, up from 10.8% in the second quarter.
Student loan borrowers from mostly black neighborhoods were shown to be defaulting at nearly twice the rate as borrowers from neighborhoods that are mostly white, the New York Fed said in a study released alongside the quarterly data. Borrowers from black neighborhoods also tend to carry larger debt loads. (Reuters)
Source: www.businessworld.ie
