US household debt breaks pre-crisis record: New York Federal Reserve

[NEW YORK] US household debt reached a new record in the second quarter, surpassing a peak recorded at the start of the global financial crisis, the New York Federal Reserve Bank said on Tuesday.

At US$12.8 trillion, debt held by American families increased 1.2 per cent from the end of the third quarter of 2008, according to the latest quarterly report.

And total borrowing was 15.1 per cent above the trough recorded in the second quarter of 2013.

Mortgages account for the bulk of borrowing at US$8.7 trillion, a US$64 billion increase from the first quarter of this year.

Meanwhile, auto lending rose by US$23 billion over the first quarter reached US$1.2 trillion, while consumer credit gained US$20 billion for a total of US$784 billion, the highest levels for both since the end of 2009.

Student loans were steady at US$1.3 trillion.

The foreclosure rate remained low by historical standards and the default rate was steady, the report said, with 244,000 individual borrowers in default, about the same as the second quarter last year.

At the end of June, 4.8 per cent of outstanding debt, or US$612 billion, was declared in default, of which US$411 billion was more than 90 days delinquent.

However, credit card defaults rose for the third straight quarter, a trend not observed since 2009.

AFP