Household debt reaches US high – driven by mortgages

US credit-card balances fell by the most on record last year even as households increased their total debt by taking on new mortgages, the Federal Reserve Bank of New York said. Total debt rose by $206 billion in the fourth quarter, bringing the annual increase to 3% to set a record of $14.56 trillion, the data show. Home loans, which increased 5% last year, crossed the $10 trillion threshold for the first time. Credit-card debt rose slightly in the fourth quarter, but ended the year down 12% from 2019, the largest annual decline ever in data analyzed by the New York Fed. Late payments also fell. The changes in household debt reflect the topsy-turvy nature of 2020, when record-low interest rates fueled a surge in mortgage refinancings by well-heeled homeowners that at times overwhelmed lenders and investors. At the same time, millions of households were set back by mounting joblessness and an increase in hunger. Credit-card balances fell because househo