In the second quarter of 2021, US household debt rose to a record $ 15.0 trillion, while mortgage debt rose to $ 10.4 billion amid a refinancing boom. According to the latest report from the New York Fed Home Debt and Loans Report, from April to June, mortgage debt increased by $ 282 billion.
The growth was mainly driven by record mortgage lending as many households took advantage of historically low mortgage rates to refinance their mortgages and even raise some cash in the process. Mortgages topped $ 1.2 trillion for the first time, with 85 percent of that coming from lenders with very good or excellent credit ratings. The average credit rating of newly issued mortgage loans was 786 (excellent), which indicates a high proportion of refinancing.
Interestingly, the high volume of refinancing from ultra-large borrowers has also contributed to historically low delinquency rates. With 97.3 percent of total household debt outstanding, the current situation is in stark contrast to the end of 2009, when only 88 percent consumer debt did not commit any offenses.