US households now hold a record $14 trillion in debt

US households now hold more than $14 trillion of debt, a new record, the New York Federal Reserve said this week.

Total household debt rose by $193 billion during the last quarter of 2019, continuing a five-year upward trend. It now stands $1.5 trillion higher, in nominal terms, than the pre-recession peak of $12.7 trillion reached in 2008.

With the unemployment rate historically low, consumers are encouraged to spend. Credit card debt rose by $57 billion last year.

Low interest rates are making mortgages cheap, driving additional debt. The average rate on a 30-year mortgage fell below 4% in August for the first time in nearly three years. New mortgages, including refinancing, jumped to the highest volume seen since 2005.

Year-over-year, total household debt rose by $601 billion.

The Federal Reserve slashed interest rates three times last year and since then, Chairman Jerome Powell has signaled the central bank plans to take a wait-and-see approach for this year.

On Capitol Hill this week, the Fed chairman told lawmakers that the US economy is still in “a good place,” but that policymakers would act as needed to continue the longest-running expansion on record, now in its 11th year.

Student loan debt also continued to rise in 2019, topping $1.5 trillion — but its growth has slowed. Student debt climbed by $51 billion last year, well below the $114 billion increase reported in 2013. About 11% of the student loan debt was more than 90 days delinquent — about the same as it was during the previous quarter.

But delinquencies are rising faster for credit card debt holders.

“Transitions into delinquency among credit card borrowers have steadily risen since 2016, notably among younger borrowers,” said Wilbert Van Der Klaauw, senior vice president at the New York Fed, in a statement.