Increasing Mortgage Debt
While all consumer credit-based spending has been rising, the jump in home
mortgage debt worries economists most.
From 2001 to 2004, home mortgage debt increased 25 percent (after adjusting
for inflation), according to the Senate’s Joint Economic Committee (JEC).
The JEC noted:
Analysts have expressed concern about the growth of consumer debt and
its effect on the U.S. economy. Some fear that the combination of increasing
debt and higher interest rates will impair the ability of households to
meet their monthly financial obligations. However, interest payments as
a percentage of disposable income have actually fallen since the end of
the recession in 2001. Total household debt has increased since the end
of the recession, but the vast majority of the increase can be attributed
to the growth of home mortgage debt spurred by historically low mortgage
interest rates.
...Mortgage debt has grown from 32 percent of gross domestic product
(GDP) in 1980 to over 60 percent today. This increase is reflected in part
in the record-high home ownership rate in the U.S. Consumer credit [including
credit cards and auto loans] grew more slowly, increasing from 13 percent
of GDP in 1980 to 18 percent.
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