Mortgage Debt Increases in Q4

Mortgage balances rose by $120 billion in Q4 2019 according to the Federal Reserve Bank of New York. Total household debt increased by $193 billion (1.4%) to $14.15 trillion in Q4.

“Mortgage originations, including refinances, increased significantly in the final quarter of 2019, with auto loan originations also remaining at the brisk pace seen throughout the year,” said Wilbert Van Der Klaauw, SVP at the New York Fed. “The data also show that transitions into delinquency among credit card borrowers have steadily risen since 2016, notably among younger borrowers.”

The New York Fed’s study also covered delinquency transitions, which remained largely unchanged in Q4 2019 compared to recent quarters. Transitions from early delinquency deteriorated in the fourth quarter, as 17.4% of mortgages in early delinquency (30-60 days late) transitioned into 90+ days delinquent.

Mortgage originations jumped to the highest volume seen since Q4 2005, rising to $752 billion in the fourth quarter from $528 billion in Q3 2019, due to a large increase in refinance activities. Among newly originating mortgage borrowers, the median credit score stood at 770, a 5-point increase from the Q3 2019. Auto loan originations remained high at $159 billion in the fourth quarter of 2019.

As debt increases, many Americans are feeling burdened, thought mortgage debt is not the leading debt burden. A new survey by LendingTree found that almost 60% of Americans feel burdened by debt in 2020, with 12.4% most concerned about mortgage debt.

The report states that even though mortgage debt is the largest source of debt, people feel less burdened by it, as that type of debt is considered a “good debt” as it contributes to consumers’ financial future.

Fourteen-percent of all millennials surveyed is concerned over mortgage debt—the highest among the three generations polled. Thirteen-percent of Gen X’s surveyed were concerned about mortgage debt and just 10% of Baby Boomers were worried.