U.S. household debt climbed to a record high of $15.0 trillion in the second quarter of 2021, as mortgage debt climbed to $10.4 billion amid a refinancing boom. According to the New York Fed’s latest Household Debt and Credit Report, mortgage debt increased by a whopping $282 billion between April and June.
The increase was mainly driven by a record volume of mortgage originations, as many households took advantage of historically low mortgage rates to refinance their mortgages and even take out some cash in the process. Mortgage originations climbed past $1.2 trillion for the first time, with 85 percent of that total coming from lenders with very good to excellent credit scores. The median credit score of newly originated mortgages was 786 (excellent), indicating a high share of refinances.
Interestingly, the high volume of refinances from super-prime borrowers has also contributed to historically low delinquency rates. With 97.3 percent of total household debt non-delinquent, the current situation is in sharp contrast to the end of 2009, when just 88 percent of consumer debt was non-delinquent.