Americans’ debt level notched another record-high in the second-quarter on the back of modest rises in mortgage, auto and credit-card-debt where delinquencies jumped.
The media reported on Wednesday that total U.S. household debt was 12.84 trillion dollars in the three months to June, up 552 billion dollars from a year ago, according to a Federal Reserve Bank of New York report published on Tuesday.
The proportion of overall debt that was delinquent, at 4.8 per cent was on par with the previous quarter.
However, a red flag was raised over the transitions of credit card balances into delinquency which the New York Fed said “ticked up notably.”
Loosening lending standards have allowed borrowers with lower credit scores to access credit cards, Andrew Haughwout, an in-house economist, said in the report.
“The current state of credit card delinquency flows can be an early indicator of future trends and we will closely monitor the degree to which this uptick is predictive of further consumer distress,” he said.
Total US indebtedness is about 14 per cent above the trough of household deleveraging brought on by the 2007-2009 financial crises and deep recession, a pull-back that interrupted what had been a 63-year upward trend.
Mortgage debt was 8.69 trillion dollars in the second quarter, up 329 billion dollars from last year, the report said.
Student loan debt was 1.34 trillion dollars, up 85 billion dollars, while auto loan debt came in at 1.19 trillion dollars, up 55billion dollars. (Reuters/NAN)