WASHINGTON-US. mortgage debt reached the record in the second quarter and exceeded the peak of 2008 when the financial crisis erupted.
Mortgages rose by $ 162 billion in the second quarter to $ 9,406 billion, surpassing the high of $ 9.294 billion in the third quarter of 2008, the Federal Reserve Bank of New York said on Tuesday.
Mortgage loans are the largest component of household debt. The origin of the mortgage, which includes refinancing, increased by $ 130 billion to $ 474 billion in the second quarter. The figures are nominal, which means they are not adjusted for inflation.
Share Your Thoughts
Have you considered borrowing against the equity in your home? For what purpose? Join the conversation below.
"The big picture is that when you look at mortgage loans, which is the largest piece of [household debt]it still looks pretty healthy," she said
chief U.S. economist at JPMorgan Chase, noting that while household debt has grown, so has revenue.
The milestone for mortgage debt has been a long time coming. American mortgage debt fell by about 1
Household debt has risen since mid-2013, rising 1.4% from the first quarter to $ 13.86 trillion, the 20th consecutive quarter.
The household debt picture is still much different in 2019 than it was 11 years ago, since lending standards are tighter and smaller debt is criminal today.
The second quarter saw a sharp fall in the 30-year mortgage rate, which increased borrowers' incentive to take out a mortgage or refinance. The average interest rate on a 30-year fixed rate fell below 4% in May for the first time since the beginning of last year.
"What is more interesting is when you look at the service load, we have no more debt," he said
chief economist at Grant Thornton.
The housing market has continued to shrink due to low inventory and high prices. Home prices hit a new nominal peak in September 2016 and have continued to climb since then.
In addition to higher home prices, a factor behind rising mortgage loan balances in the second quarter may be homeowners taping into equity for cash when refinancing.
Refinancing accounted for about half of new mortgages in the second quarter, according to Guy Cecala, CEO of Inside Mortgage Finance, an industry research group.
It represents a "mini refinancing boom" since the refinancing share of new mortgage loans was about 30% in 2018, as interest rates increased, Cecala said.
Borrowers who refinanced in the second quarter and chose the option to repay, pulled an estimated $ 17.5 billion in equity out of their homes, according to Freddie Mac, a mortgage loan company. Although it was $ 2.1 billion higher than the second quarter of last year, it is still well below the $ 84 billion preparatory peak paid in the second quarter of 2006.
"American homeowners are very careful about liquidating equity," he said.
Freddie Mac's chief economist, cites the scars from the recent recession.
Mortgage loans are still the largest form of household borrowing, but have become a smaller proportion of total debt since the end of the 2000s as consumers take on more car and student loans.
Despite higher debt burdens, it seems that Americans are paying attention. The report found that 95.6% of the balance was electricity, the highest level of the current expansion.
In the second quarter, Americans continued to borrow more for cars and their credit card balance increased, although student debt declined slightly.
Outstanding student loan debt was $ 1.48 trillion in the second quarter, down $ 8 billion from the first quarter of this year. Student loan weights generally decline or stagnate in the second quarter before picking up in the third at the start of the academic year.
Write to Harriet Torry at email@example.com
Copyright © 2019 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8