In the final quarter of 2019, American household debt blew by its former heights to set new records. According to recently released Federal Reserve data, as 2019 drew to a close, American household debt hit $14.15 trillion. That was a $193 billion increase over the preceding quarter. 2019 saw household debt soar $601 billion over the 2018 debt level, the largest annual increase since 2007.

Mortgage Loans Largest Part

Of that $14.15 trillion, $9.56 trillion is mortgage debt. In the last quarter of 2019, mortgage debt increased by $120 billion, with mortgage originations hitting a peak that hasn’t been seen since the end of 2005. Refinance loans are included in that group, with low rates contributing to a surge in refinancing.

Car Loans Also Driving Debt

$159 billion in auto loans were originated in the final quarter of 2019. Auto loan debt has been growing right along with auto prices, although the used vehicle market is a strong auto loan sector. Over the past ten years, auto loan balances have gone up 84 percent. At the end of 2019, outstanding auto loans were at $1.33 trillion, with about $293 billion of that amount being sub-prime loans.

The overall auto loan delinquency rate increased a little bit during the fourth quarter of 2019, from 2.34 percent in the third quarter to 2.36 percent. However, in the sub-prime loan group, about 23 percent are more than 90 days delinquent. That doesn’t bode well for those holding sub-prime loan heavy asset backed securities, any more than it did when sub-prime home loans were transformed into investment vehicles.

Credit Card Debt Increased, Delinquencies Too

At the end of 2019’s final quarter, Americans were carrying about $930 billion in credit card debt. While an increase is expected during the holiday season, the $46 billion rise is significantly higher than the norm. Credit card debt hasn’t hit this level since just before the sub-prime mortgage meltdown fueled fiscal crisis kicked off in 2008.

Delinquency of more than 90 days is also on the rise, moving up to 5.32 percent, a rate not seen in a little over seven years. Younger borrowers, those in the18 to 29 age group, have a higher 90-day delinquency rate of 8.91 percent. Some analysts point to high rates of student loan debt as contributing to this group’s credit card debt problems. Outstanding student loan debt saw a $10 billion increase from the third quarter of 2019, rising to $1.51 trillion. About 11 percent of that debt is delinquent or in default.

Many Don’t Have Cash For Unexpected Expense

In the midst of all this record-breaking household debt, it should come as no surprise that many don’t have cash reserves sufficient to ride out one of life’s little emergencies. Just 41 percent of Americans could come up with $1,000 cash in an emergency. The rest would have to add to their debt, via credit card or a loan, or do without.

Rethink Credit Use

Skyrocketing consumer debt may offer short-term benefits by helping drive the economy. However, not all debt is necessary or wise. Taking on debt for an impractical, unmarketable degree (and, taxpayers shouldn’t be forced to subsidize that foolishness either!), carrying high interest debt for nonessential consumer goods and borrowing for more house or car than is really affordable don’t offer long-term benefits for financial health, not for the individual or the nation.