Consumer debt has been rising steadily post-pandemic and hitting records along the way. 2021’s second quarter was no different and saw overall household debt rise to a record high of $14.96 trillion.
The New York Federal Reserve’s quarterly report showed an increase of $313 billion in the second quarter of 2021 in household debt and credit. Leading drivers of debt growth continue to be mortgage debt and credit card debt.
The NY Fed’s administrator of the Center for Microeconomic Data noted that a steady pace of mortgage originations and extensions, auto loans, and steadily increasing demand for credit card borrowing are at the forefront of debt growth.
Credit inquiries rose by 3.7% in the last six months, providing yet another indicator of the increased demand for consumer credit.
Consumer spending rose steadily in Q2 2021, leading to an increase in credit card balances of $17 billion. The growth follows a period of decline since the start of 2021 and overall credit card balances remain below their peak in 2019 in spite of the rise.
To meet the increasing demand, many credit card companies are revamping their credit card offers for new applicants and experienced cardholders alike.
According to data from the NY Fed, auto loan originations reached $202 billion in the second quarter and new mortgage originations accounted for $1.22 trillion of new debt.
Researchers added that about 40% of mortgage originations in the past four quarters were meant for home purchasing while the rest funded refinancing. Despite economic conditions improving, over 2 million mortgages are still in forbearance as of June.