Household debt reached $16.19 trillion in the final quarter of 2022, according to a recent New York Fed report.
02/16/2023 10:55 A.M.
3 minute read
The Federal Reserve Bank of New York’s Center for Microeconomic Data released its Quarterly Report on Household Debt and Credit Tuesday, detailing trends in household borrowing and indebtedness, including data about mortgages, student loans, credit cards and auto loans.
The report found that total household debt in Q4 2022 increased by $394 billion (2.4%) to $16.90 trillion. Balances now stand $2.75 trillion higher than at the end of 2019, before the pandemic recession.
The report is based on data from the New York Fed’s nationally representative Consumer Credit Panel.
Major findings from the report include:
- “Mortgage balances rose by $254 billion in the Q4 as well and stood at $11.92 trillion at the end of December, marking a nearly $1 trillion increase in mortgage balances in 2022.
- Credit card balances increased $61 billion in the fourth quarter to $986 billion, surpassing the pre-pandemic high of $927 billion.
- Auto loan balances increased by $28 billion in Q4, consistent with the upward trajectory seen since 2011.
- Student loan balances now stand at $1.60 trillion, up by $21 billion from the previous quarter.
- In total, non-housing balances grew by $126 billion.
- Mortgage originations, which include refinances, fell to $498 billion in the fourth quarter, representing a return to lower levels last seen in 2019.
- The volume of newly originated auto loans was $186 billion, representing a slight increase from the previous quarter.
- Aggregate limits on credit card accounts increased by $88 billion in the fourth quarter and now stand at $4.4 trillion.
- The share of current debt becoming delinquent increased again in the fourth quarter for nearly all debt types, following two years of historically low delinquency transitions.
- The delinquency transition rate for credit cards and auto loans increased by 0.6 and 0.4 percentage points, respectively.”
“Credit card balances grew robustly in the 4th quarter, while mortgage and auto loan balances grew at a more moderate pace, reflecting activity consistent with pre-pandemic levels,” said Wilbert van der Klaauw, economic research advisor at the New York Fed. “Although historically low unemployment has kept consumers’ financial footing generally strong, stubbornly high prices and climbing interest rates may be testing some borrowers’ ability to repay their debts.”
Credit Card and Auto Loan Delinquency
The New York Fed also issued an accompanying Liberty Street Economics blog post examining credit card and auto loan delinquency, with a focus on borrowers by age.
While delinquency transition rates appear relatively small, a closer look reveals some signs of stress among younger borrowers who are beginning to miss some credit card and auto loan payments.
Overarching trends from the report include:
Housing Debt
- Newly originated mortgage debt reached $498 billion in Q4 2022, which closely resembles pre-pandemic volumes.
- New foreclosures have stayed very low since the CARES Act moratorium was put into place, and about 34,000 individuals had new foreclosure notations on their credit reports.
Student Loans
- Outstanding student loan debt stood at $1.60 trillion in Q4 2022.
- Less than 1% of aggregate student debt was 90+ days delinquent or in default in Q4 2022. This sharp drop reflects the beginning of the Fresh Start program, which marked over $34 billion defaulted loans as current, amid the continued repayment pause on student loans.
Read the New York Fed’s quarterly report and the Liberty Street Economics blog post for more findings.
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