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Household debt climbs to $ 14.56 trillion as more Americans seek mortgages

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Total household debt jumped 1.4% to $ 14.56 trillion in the fourth quarter of 2020, largely due to the surge in mortgages as Americans participated in the booming housing market .

The total debt balance is $ 414 billion more than at the end of 2019 and $ 206 billion more than at the end of the third quarter, according to the New York Federal Reserve. Mortgages, including refinances, hit an all-time high of $ 1.2 trillion for the fourth quarter as Americans took advantage of low mortgage rates and stimulus measures.

Mortgage balances shown in consumer credit reports exceeded $ 10 trillion in Q420 and represented an increase of $ 182 billion from the previous quarter. The increase came as the United States closed a year in which Americans sought larger living spaces as they adopted work-from-home policies amid the coronavirus pandemic. Sales of existing homes for 2020 increased 22.2% year-over-year, reaching their highest level since 2006, according to the National Association of Realtors.


Consumer spending is lagging behind

At the same time, credit card debt also rose in the fourth quarter from $ 12 billion to $ 820 billion, although it is still $ 108 billion lower than it was at the end of the year. 2019. This is the largest annual decline since 1999, in line with persistently low consumer spending as well as cardholder reimbursements.

U.S. households cut spending in December for the second straight month, in a season typically characterized by robust holiday shopping and mega-sales. Personal consumption expenditure (PCE) fell $ 27.9 billion, or 0.2%, according to the Bureau of Economic Analysis.

However, consumer spending is reaching a turning point as US retail sales rose in January for the first time since September, a welcome sign that the US economy is slowly recovering from the coronavirus pandemic in the new year. Retail and foodservice sales in the United States totaled $ 568.2 billion in January, up 5.3% from $ 539.7 billion in December and 7.4% from compared to $ 528.9 billion as of January 2020, the US Census Bureau reported.

Auto and student loan balances increased by $ 14 billion and $ 9 billion respectively.

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