NEW YORK–Total consumer debt hit a fresh new high in the first quarter of 2023, pushing past $17 trillion even amid a sharp pullback in home borrowing, according to the New York Federal Reserve.
The total for borrowing across all categories hit $17.05 trillion, an increase of nearly $150 billion, or 0.9% during the January-to-March period, the New York Fed data show. The Fed analysis said that took total indebtedness up about $2.9 trillion from the pre-COVID period that ended in 2019.
“That increase came even though new mortgage originations, including refinancings, totaled just $323.5 billion, the lowest level since the second quarter of 2014,” noted CNBC. “The total was 35% lower than in the fourth quarter of 2022 and 62% below the same period a year ago.”
‘Impact to be Seen for Decades’
New home loans peaked at $1.22 trillion in the second quarter of 2021 and have been falling as interest rates have increased. A series of Fed rate cuts helped push 30-year mortgage rates to a low around 2.65% in January 2021, the report added.
"The mortgage refinancing boom is over, but its impact will be seen for decades to come," Andrew Haughwout, director of household and public policy research at the New York Fed, said in a statement accompanying the report.
The Specifics
According to the Fed data:
- About 14 million mortgages were refinanced during the pandemic period starting in March 2020. Some 64% were considered "rate refinances," or homeowners looking to take advantage of lower borrowing costs. Average savings totaled about $220 per month for those borrowers, according to the New York Fed.
- Despite rising rates, mortgage foreclosures remained low. Delinquency rates for all debt increased, up 0.6 percentage point for credit cards to 6.5% and 0.2 percentage point for auto loans to 6.9%. Total delinquency rates moved up 0.2 percentage point to 3%, the highest since the third quarter of 2020.
- Student loan debt edged higher to $1.6 trillion and auto loans nudged up as well to $1.56 trillion.
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