U.S. consumers added to their debt loads at the fastest pace in 14 years in 2021 as they borrowed more to afford homes, cars and other goods that are becoming increasingly expensive, according to a report released yesterday by the New York Federal Reserve, Reuters reported. Total household debt grew by $1 trillion last year, marking the largest increase in overall debt since 2007, according to the New York Fed's quarterly report on household debt and credit. The total debt balance is now $1.4 trillion higher than it was at the end of 2019. "The aggregate balances of newly opened mortgage and auto loans sharply increased in 2021, corresponding to increases in home and car prices," Wilbert Van Der Klaauw, senior vice president at the New York Fed, said in a statement. Over $4.5 trillion in mortgages were originated in 2021, reaching a historic high for the database, which goes back to 1999. Mortgage balances increased by $258 billion in the fourth quarter to $10.93 trillion at the end of December. Auto loan originations returned to pre-pandemic trends but loan amounts increased in response to rising car prices, New York Fed researchers said. "As car prices have soared, buyers have borrowed more to finance the additional cost," researchers wrote in a blog post published on Tuesday.
