By Jonnelle Marte
Feb 17 (Reuters) – The coronavirus pandemic changed the use of credit among consumers in the United States who decided to pay their debts with bank cards, while low interest rates in a quarantine environment boosted home purchases and the mortgage refinancing, said the New York Fed.
Last year, total household debt rose by $ 414 billion, to $ 14.56 trillion at the end of December, said the New York Federal Reserve report on real estate and banking consumption released Wednesday. .
“The COVID pandemic and the recession that followed marked the end of the household borrowing dynamics that had characterized the expansion since the Great Recession, which included strong growth in auto and studio loans, while mortgage amounts and credit cards grew slower, “the report said.
“As the pandemic took hold, these dynamics changed.”
Mortgage amounts, which make up the majority of household debt, grew by $ 182 billion in 2020, the largest increase since 2007.
Home buying and refinancing took off last year after the Federal Reserve slashed its key interest rate to near zero to combat the economic fallout of the pandemic, leading to lower mortgage rates.
The massive transformations to work and study from home also bolstered the housing market, as some families sought properties with more space.
Credit card balances increased by $ 12 billion in the fourth quarter, but were still $ 108 billion lower than the prior year’s figures, the largest annual decline since the report began being released in 1999.
The year-on-year drop is a sign that many credit card holders cut spending and used pandemic relief checks to pay off bank debts, the researchers said in the report.
(Reporting by Jonnelle Marte. Edited in Spanish by Marion Giraldo)