Americans’ debt levels continue to climb to new heights at a time when economic conditions are becoming increasingly less stable.
According to data released yesterday in the New York Fed’s Q1 report on household debt, household debt balances in the country set a record high of $17.05 trillion, growing $148 billion from the fourth quarter of last year.
The increases in debt were seen across practically all categories, with larger (and new record) balances for mortgages, home equity lines of credit, auto loans, student loans, retail cards and other consumer loans.
Notably, credit card balances were flat, holding at $986 million, during the first quarter of this year.
However, this is the first time in more than 20 years — since the New York Fed started tracking the data — that there hasn’t been an outright decline in credit card balances in Q1, suggesting that people aren’t cutting back after heavy holiday spending. Instead, they’re probably using credit cards to finance daily spending due to the rising cost of goods and services.
On credit card balances, Matt Schultz, chief credit analyst at Lending Tree said, “The fact that they didn’t fall in Q1 this year doesn’t bode well for the rest of the year.”
Related: How to Dig Your Way Out of Debt
Delinquency is also rising, as well as serious delinquency, which is when a debt is 90+ days past due. The report showed that 4.57% of credit card debt transitioned to serious delinquency last quarter, up from 3.04% in Q1 of 2022. For credit card holders aged 18-29, 8.3% of balances were in serious delinquency.
The Fed’s report had a few other takeaways:
- Auto loan delinquencies are higher than they were before the pandemic for those under 40. The average monthly car payment has jumped, to $729.
- Mortgage debt increased by $121 billion in the first quarter, reaching a $12.04 trillion balance, despite mortgage originations being way down. This is likely due to the Fed’s interest rate hiking.
- Student debt saw a slight decrease in the rate of serious delinquency, which went down to less than 1% — but that’s because the repayment is paused for now.
Despite the debt balance being almost $3 trillion higher than pre-pandemic levels, Fed analysts see one bright spot: Many households are still more financial stable than they were before, due to the mortgage refi boom of 2020-2021, when rates were at their lowest.
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