The Quarterly Report on Household Debt and Credit has been released by the Center for Microeconomic Data at the Federal Reserve Bank of New York, according to a press release. This report highlights a slight elevation in overall household debt during the second quarter of 2023, showing an augmentation of $16 billion (0.1%) to reach a total of $17.06 trillion.
“Credit card balances saw brisk growth in the second quarter,” said Joelle Scally, regional economic principal within the household and public policy research division at the New York Fed. “And while delinquency rates have edged up, they appear to have normalized to pre-pandemic levels.”
The data that was used in this analysis came from the Consumer Credit Panel which is run by the New York Fed. Credit card balances have also increased, reaching a new all-time high of $1.03 trillion in the second quarter of 2023, representing a 4.6% gain from the $986 billion that they were at the beginning of 2023. This represents a growth of $45 billion. There was a 5.48 million increase in the number of credit card accounts, bringing the total number of accounts to 578.35 million. There has been a significant increase in credit card limits, bringing the total up to $4.6 trillion.
The total amount of mortgage debt that was still outstanding as of the end of June was $12.01 trillion. This figure is virtually identical to what it was in the prior quarter. This tranquility can be attributed in large part to the moderation of home price appreciation as well as the general downward trend in mortgage origination rates. The second quarter of this year saw a total of $393 billion in new mortgage loans being originated. This figure takes into account loans for refinancing totaling $70 billion. In addition, the total amount owed by consumers on retail credit cards and other types of consumer loans rose by a combined $15 billion. The amount of money lent out for car purchases grew by $20 billion, maintaining an upward trend that started back in 2011. The larger monetary amounts that are associated with these loans are primarily responsible for the newly issued auto loans and leases totaling $179 billion. This pattern persists despite the fact that the volume of new loans is far lower than it was before the pandemic. Concurrently, the outstanding balance of student loans is now $1.57 trillion, which is $35 billion lower than it was one year ago.
Following a precipitous decline ever since the beginning of the epidemic in 2023, the rate of criminal activity remained low and unchanging during the second quarter of that year. The transition rates for credit cards and auto loans also increased by 0.7 and 0.4 percentage points, respectively, indicating an upward trend in the percentage of debt that is unexpectedly entering default. The situation with credit card balances was the most dire in the debt environment during this quarter, particularly when compared to the extremely low default rates that were observed for the entirety of the epidemic. Student loan performance has not improved, and default rates have remained at historically low levels despite the fact that the government is pausing the repayment process for a period of time (which is scheduled to finish on Aug. 31).
