Household debt exceeds $16 trillion in second quarter of 2022

by Karen Faulkner, Worthy News Correspondent

(Worthy News) – Total household debt increased by $312 billion (2%) to $16.15 trillion in the second quarter of 2022, the Federal Reserve Bank of New York’s Center for Microeconomic Data said in its Quarterly Report published Tuesday.

Balances are now $2 trillion higher than in 2019 before the COVID-19 pandemic, the New York Fed noted.

Mortgage balances increased by $207 billion in the second quarter of 2022 and stood at $11.39 trillion at the end of June, the New York Fed said. Moreover, credit card balances increased by $46 billion, and auto loan balances increased by $33 billion in the second quarter. Student loan balances remained more or less the same and currently stand at $1.59 trillion.

“The second quarter of 2022 showed robust increases in mortgage, auto loan, and credit card balances, driven in part by rising prices,” Joelle Scally, Administrator of the Center for Microeconomic Data at the New York Fed, said in a statement.

“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,” Scally added. According to the Quarterly Report, three percent of newly originated mortgages were originated to subprime borrowers.

Although foreclosures have been low due to pandemic-related moratoria on foreclosures and mortgage forbearances, 35,000 individuals saw new foreclosures on the credit reports, an increase from 24,000 in the previous quarter. “This potentially suggests the beginning of a return to more typical levels,” the New York Fed said.

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