The Federal Reserve reported Tuesday that households increased debt at the fastest pace in 15 years during the third quarter due to a sharp increase in credit card use and mortgage balances.
Total lending increased by $351 billion for the July-to-September period, the largest marginal quarterly increase since 2007, bringing collective domestic IOUs in the US to a new record $16.5 trillion, up 2.2% from the previous quarter. and was 8.3% higher than one. year ago.
The increase followed a $310 billion jump in the second quarter and represents an increase of $1.27 trillion annually.
Inflation is running near the highest pace in more than 40 years and debt has increased over the past year due to rising interest rates and strong consumer demand.
The biggest contributors to that debt load came from mortgage balances, which rose by $1 trillion from a year earlier to $11.7 trillion, and credit card debt, which climbed to $930 billion.
Credit card balances collectively rose more than 15% from the same period in 2021, the biggest annual jump in more than 20 years, according to the New York Fed, which released the report. “Increase in figures over the past eighteen years,” a group of Fed researchers said in a blog post on the central bank site.
“Credit card, mortgage and auto loan balances reflect a combination of strong consumer demand and higher prices in the third quarter of 2022,” said Donghun Lee, economic research adviser to the New York Fed. “However, the origination of new mortgages has slowed to pre-pandemic levels amid rising interest rates.”
Researchers at the New York Fed attributed the credit card growth to “very strong” consumption, rising prices and access to substantial levels of consumers’ savings accounts.
Crimes have increased along with the increase in balance.
However, while “crime rates are rising, they remain low by historical standards and suggest that consumers are managing their finances through a period of rising prices,” the researchers wrote.
Elsewhere in the report, the Fed said auto loan balances exceeded $1.52 trillion, while student loan debt fell to less than $1.57 trillion, the lowest since the second quarter of 2021 between the period and The debt of the Biden administration’s effort to forgive some education loans.
Auto loan advances, while only marginally up on a quarterly basis, are 5.6% higher than a year ago.
Mortgage balances continue to rise amid a sharp rise in interest rates, with 30-year mortgages hovering around 7%. Total lending climbed even as originations fell sharply, falling nearly 17% to $633 billion.
Foreclosures remained low even after the pandemic-related moratorium ended. The student loan delinquency rate remained around 4%.
