Household debt jumped in 2019, posting the fastest annual growth since 2007.
Mortgages powered the jump, though credit standards and delinquencies showed signs of restraint.
Student loans are more likely than other forms of debt to be delinquent, but they are not the most popular form of first-time debt for young people.
Visit Business Insider’s homepage for more stories.
A Federal Reserve report released Tuesday showed household debt jumped in 2019, posting the biggest annual increase since 2007.
Household debt grew by $601 billion in 2019 to reach $14.15 trillion. Mortgages powered that jump, with annual balances increasing by $433 billion last year, according to a note from economists at the New York Fed.
But these are not the fast-and-loose mortgages of the pre-recession era. A nearly record-low share of existing mortgages, 1%, went delinquent in the last quarter of 2019, and the average credit score for a mortgage notched up 5 points to 770, the report said.
Further, credit standards tightened overall in the last quarter, according to the report. That’s as auto and credit card balances both increased by $57 billion last year, according to the note.
Meanwhile, student loans grew by $51 billion, less than half of the record $114 billion increase they posted in 2013, according to the note.
But while student loans grew more slowly, they are also more likely to be delinquent than other forms of debt. A greater share of student loan balances transition to delinquency than any other form of borrowing. Overall, 11.1% of all student debt was 90 or more days delinquent in the last quarter of 2019, though challenges in classifying student loans as delinquent mean the effective delinquency rate is likely about double that, the report said.
It’s a reality that may affect fewer young people going forward. Student loans were the most popular form of debt for young people from 2010 to 2013, but now the most common form is credit card debt — more than half of people under 30 have a credit card on their credit report, the report said.
Join the conversation about this story »
NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the ‘3rd wave’ firms that are leading the next round of tech disruption
Source:: Business Insider