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Tuesday, September 21, 2021

American Consumers Cut Debt by 13% Since the End of 2019

#consumer #debt #houdeholds #Fed #virus

US household debt rose in Q-2 due to an increase in mortgage balances as consumers took advantage of record low interest rates to buy homes and refinance loans, according to a survey released by the New York Federal Reserve Tuesday.

The Big Q: Is there enough borrowing capacity in consumer debt only to make potential buying under the favorable consumer confidence index?

The Big A: Yes

The Big Q2: Overall will the consumer be looking at increasing their savings reserves in the event of more virus fear?

The Big A2: Yes

The average American household has approximately $137,000 in debt. This debt is made up of credit cards, auto loans, student loans, and mortgages. With the increase in the cost of living and the median income at approximately $59,000, debt is becoming a growing issue for many Americans.

Households reduced their credit card balances for the 3rd Quarter running, but the $10-B decline during the Q-3 is a fraction of the $76-B decline in Q-2. Altogether, consumers shed $120-B in credit card debt in the 1st 9 months of Y 2020, cutting debt by 13% from the end of 2019.

Mortgage balances increased by $85-B to $9.86-T, driven by a combination of refinancing and home purchases. The $1.05-T in mortgage originations was the highest since a refinance boom in Q-3 of Y 2003.

Balances for home equity lines of credit, which have been declining since Q-4 of Y 2016, dropped by $13-B to $362-B.

Consumers continued to benefit from government aid/relief/stimulus and forbearance programs offered on student loans, auto loans and mortgages during the pandemic, the New York Fed found.

The number of student and mortgage loans becoming delinquent continued to drop as people remain covered by forbearance.

But delinquency rates for auto loans crept higher after entering forbearance, since forbearance varied by lender and was not legally required for those loans, the New York Fed noted in a separate blog post published Tuesday.

Have a healthy day, Keep the Faith!

Paul Ebeling
Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.   

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