Balances now stand $2 trillion higher than at the end of 2019, according to the Federal Reserve Bank of New York.
08/03/2022 1:45 P.M.
2.5 minute read
The Federal Reserve Bank of New York’s Center for Microeconomic Data’s recent Quarterly Report on Household Debt and Credit found an increase in total household debt in the second quarter of 2022, increasing by $312 billion (2%) to $16.15 trillion.
Balances now stand $2 trillion higher than at the end of 2019, before the COVID-19 pandemic.
The report is based on data from the New York Fed’s nationally representative Consumer Credit Panel.
“The second quarter of 2022 showed robust increases in mortgage, auto loan, and credit card balances, driven in part by rising prices,” said Joelle Scally, administrator of the Center for Microeconomic Data at the New York Fed. “While household balance sheets overall appear to be in a strong position, we are seeing rising delinquencies among subprime and low-income borrowers with rates approaching pre-pandemic levels.”
Key findings from the report include:
- There was $758 billion in newly originated mortgage debt in Q2 2022, with 65% of it originated to borrowers with credit scores over 760. Three percent of newly originated mortgages were originated to subprime borrowers, a sharp contrast to the 13% average seen between 2003-2007.
- Although foreclosures have been very low due to the moratoria on new foreclosures and mortgage forbearances, 35,000 individuals saw new foreclosures on their credit reports, an increase from 24,000 in the previous quarter. This potentially suggests the beginning of a return to more typical levels.
- The share of mortgage balances 90+ days past due remained at 0.5%, a historic low.
- Outstanding student loan debt stood at $1.59 trillion in Q2 2022, roughly unchanged from Q1 2022.
- About 5% of aggregate student debt was 90+ days delinquent or in default in Q2 2022. The lower level of student debt delinquency reflects a Department of Education decision to report current status on loans eligible for CARES Act forbearances.
“In part, the growth in each debt type reflects increased borrowing due to higher prices. Prices for both homes and motor vehicles have been rising, and the borrowing amounts have risen in tandem—in fact, the average dollar amount for new purchase originations of both autos and homes is up 36 percent since 2019,” according to the New York Fed. “The effects of inflation are also visible in credit card balances. The $46 billion increase in credit card balances this quarter was among the largest seen in our data since 1999, at least partly reflecting inflation on consumer goods and services purchased using credit cards. Americans are borrowing more, but a big part of the increased borrowing is attributable to higher prices.”
The report is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample drawn from anonymized Equifax credit data, and provides a quarterly snapshot of household trends in borrowing and indebtedness, including data about mortgages, student loans, credit cards, auto loans and delinquencies.
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