Household debt – consisting of mortgages, credit cards, auto loans and student loans – rose 2.1% -- about $241bn – to a total of $11.52 trillion in the fourth quarter, according to a CNBC report. That’s the biggest quarterly spike since 2007.
Mortgage balances – the biggest slice of household debt – spiked $16bn in the fourth quarter from the previous year. The increase was largely fueled by declining bankruptcies and foreclosures, CNBC reported.
The spike in household debt indicates increasing consumer confidence, but some statistics show Americans are remaining cautious about the recovery. Although mortgage balances are up, new mortgages fell, according to CNBC. Home equity lines of credit also dropped by $6bn in the fourth quarter, to $529bn.
Increasing consumer confidence has led to the biggest surge in household debt since before the financial crisis.