Consumer Debt Hits Record $16.9 Trillion as Delinquencies Also Rise

The comments below are an edited and abridged synopsis of an article by Jeff Cox

Consumer debt hit a record at the end of 2022, while delinquency rates rose for several types of loans.

Consumer Debt Hits Record $16.9 Trillion as Delinquencies Also Rise - BullionBuzz - Nick's Top Six
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Debt across all categories totaled $16.9 trillion, up about $1.3 trillion from a year ago, as balances rose across all major categories.

Despite a decline in originations, mortgage balances increased to $11.9 trillion, up about $250 billion from the third quarter and about $1 trillion from a year ago. Originations for new home loans and refinancings fell to $498 billion, less than half of where they were for Q4 in 2021 and a drop of about $135 billion from the third quarter.

Mortgage loans considered in serious delinquency (90 days or more) rose to 0.57%, nearly double where they were the year prior. Auto loan debt delinquencies rose 0.6 percentage points to 2.2%, while credit card debt jumped 0.8 percentage points to 4%.

The rise in balances came amid an aggressive rate-hiking campaign from the Fed as it battled inflation at close to the highest levels in more than 41 years.

The Fed raised its benchmark rate 7 times during the year, adding another increase in January that took the overnight borrowing rate to a target range of 4.5%—4.75%. That included 4 consecutive increases of 3/4 of a percentage point, boosting rates for consumer debt instruments such as credit cards, mortgages and auto loans.

Student loan debt also increased for the month; the total balance hit $1.6 trillion in the fourth quarter.

Auto loan debt edged higher to $1.55 trillion, while credit card balances rose to just shy of $1 trillion.

The explosion in consumer debt came amid an ongoing increase in federal government borrowing. Total US government debt now stands near $31.5 trillion, up from $29.6 trillion at the end of 2022.

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