According to a report by the New York Federal Reserve reported Thursday, US consumer debt has risen to a record high of $16.9 trillion, around $1.3 trillion higher than a year ago.
The report shows that, at the end of 2022, the delinquency rate also increased on all types of loans, and loan balances were higher across all the major categories.
A recent interest rate hike from the Fed is being blamed for the rise in consumer debt. The benchmark rate was increased seven times in the last year, as the Fed has fought against inflation, which has now reached its highest levels in over 40 years.
In January, the borrowing rate reached 4.5% – 4.75&, following four consecutive increases have meant that interest rates for consumer debts like credit cards, mortgages, student debts, and car loans skyrocketed.
Mortgage balances increased by $11.9 trillion, $250 billion higher than the third quarter and about $1 trillion more than this time last year. Credit card delinquencies increased by 0.8% to 4% during the same period and auto loan debt delinquency rose by 0.6% to 2.2%.
Despite the amount of money being lent for new home loans or refinancing dropping to $498n billion last year, the number of mortgage loans in “serious delinquency” of 90 days or more increased by 0.57%, nearly twice as high as the figures from last year.
The data for January shows that student loan debt reached a total of $1.6 trillion, auto loan debt as %1.55 trillion, and credit card debt was just under $1 trillion.
When commenting on the figures, Wilbert van der Klaauw, economic research advisor at the New York Fed said: “Credit card balances grew robustly in the fourth quarter, while mortgage and auto loan balances grew at a more moderate pace, reflecting activity consistent with pre-pandemic levels.
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.”