US home mortgage debt surges past pre-recession record

With low 30-year mortgage rates, borrowers are incentivized to take out mortgages or refinance

TRD NATIONAL /
Aug.August 13, 2019 05:31 PM
U.S. mortgage rates top 2008 levels (Credit: iStock)

U.S. mortgage rates top 2008 levels (Credit: iStock)

Home mortgage debt surged to a new high in the second quarter, leaving the pre-recession 2008 peak in the dust.

The total mortgage balance grew during the second quarter by $162 billion to $9.406 trillion, according to the Federal Reserve Bank of New York, the Wall Street Journal reported on Tuesday. That’s more than the 2008 record of $9.294 trillion.

Mortgage debt has been climbing since 2013, when it fell by 15 percent in the wake of the recession. Continuing 20 straight quarters of increase, total household debt also grew by 1.4 percent to $13.9 trillion. But today’s context is markedly different from 2008: lending standards aren’t as loose as they were leading up to the recession and debt is not as delinquent.

But the housing market has been strained by low inventory and high prices, while homeowners are increasingly dipping into home equity to refinance. According to mortgage-finance company Freddie Mac, borrowers took out $17.5 billion in equity from their homes during the second quarter of the year, a $2.1 billion increase from the same time last year. Still, it’s much less than the 2006 peak of $84 billion cashed out in just the second quarter of 2016.

Refinancing made up one half of new mortgages in the second quarter, which industry researcher Guy Cecala called a “mini refinancing boom,” compared to just 30 percent of mortgages from refinancing in 2008. Contributing to the boom was a dramatic drop in the 30-year mortgage rate, now below 4 percent, incentivizing borrowers to take out mortgages or refinance. [WSJ]Georgia Kromrei


Related Article

arrow_forward_ios
FHFA director Mark Calabria is ready to set Fannie and Freddie free, while Wall Street worries about potential risks.

Wall Street warns against privatizing Fannie and Freddie without Congress guarantee

FHFA director Mark Calabria (Credit: Federal Housing Finance Agency and Getty Images)

Trump official to pressure Congress to privatize Freddie and Fannie

Mortgage rates are still falling (Credit: iStock)

Mortgage rates plummet to lowest levels in nearly 2 years

FHFA director Mark Calabria (Credit: Federal Housing Finance Agency and iStock)

Trump’s move to take Fannie and Freddie private could mean higher mortgage costs

President Donald Trump (Credit: Getty Images)

Mortgage guarantors Fannie Mae and Freddie Mac to return to private control

Empire That Ross Built

The empire that Stephen Ross built

WeWork CEO Adam Neumann (Credit: Getty Images and iStock)

Adam Neumann is facing a coup. Can We work without him?

Federal Reserve Chairman Jerome Powell (Credit: Getty Images)

Real estate stocks dip slightly amid Fed Rate cut, housing starts data

Alex Rodriguez, slugger-turned-investor, nears multifamily fundraise goal

WeWork CEO Adam Neumann (Credit: Getty Images and iStock)

Small Talk: Trying to make sense of the WeWorld

RXR Realty’s Scott Rechler and Kitchen United CEO Jim Collins

RXR Realty gets in on shared kitchen space startup’s national expansion

Wendy Silverstein (Credit: Getty Images)

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out

WeWork CEO Adam Neumann (Credit: Getty Images and iStock)

WeWork’s side businesses are fizzling

arrow_forward_ios