Household debt surges past $16T in Q2: New York Fed report

Household debt grew in the second quarter of this year as a result of consumers taking out more loans across several markets, according to the Federal Reserve Bank of New York. 

Household debt increased by 2%, or $312 billion, in the second quarter, bringing the total to $16.15 trillion, the bank said in its Quarterly Report on Household Debt and Credit. 

"The second quarter of 2022 showed robust increases in mortgage, auto loan, and credit card balances, driven in part by rising prices," Joelle Scally, New York Fed administrator of the Center for Microeconomic Data, 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."  

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This is the type of debt Americans added in Q2

The report showed that Americans are borrowing money in a variety of ways, such as through home loans, auto loans, credit cards and personal loans. Here’s a closer look at where Americans are taking on debt: 

Home loans

Mortgage debt increased by $207 billion in the second quarter, reaching a total of $11.39 trillion. This came as home prices surged near record rates during the same time period. Single-family home prices grew by 19.4% annually in the second quarter of 2022, according to Fannie Mae’s latest Home Price Index (HPI). And as home prices rose, homebuyers took on higher mortgage loan amounts in order to afford their new home. 

Additionally, mortgage originations declined slightly to $758 billion in the second quarter amid rising mortgage rates, the report said. 

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Auto loans

Auto loan debt increased by $33 billion in the second quarter, as the volume of new auto loan originations increased to $199 billion, according to the report. This continued the high volume of auto originations that have occurred since the third quarter of 2020. Used cars are also costing consumers $10,000 more than usual as of June, a 45% increase from the year before

One way to keep your auto costs low is by comparing your auto insurance with other providers. If you are considering switching your auto insurance, you can visit Credible to find rates available to you.

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Credit cards

Credit card balances increased by $46 billion in the second quarter. And while credit card balances typically see an increase during this time of year, they surged 13% from the second quarter of 2021, making it the largest increase in more than 20 years, according to the report. Additionally, aggregate limits on credit card accounts increased by $100 billion and now stand at $4.22 trillion – the largest increase in more than ten years.

If you are interested in paying down your credit card debt, you could consider using a personal loan to lower your interest rate and pay down your debt faster. Visit Credible to get prequalified in minutes without affecting your credit score.

Other loan balances

Other loan balances either saw increases or held steady over the second quarter, according to the New York Fed’s report. Student loan balances remained roughly unchanged from the first quarter at $1.59 trillion. Retail loans and other consumer loans increased by $25 billion. And non-housing balances increased by $103 billion in the second quarter, the largest increase since 2016. 

If you are interested in paying down debt, you could consider taking out a personal loan to consolidate and save on your monthly payments. To see if this is the right option for you, contact Credible to speak to a loan expert and get all of your questions answered.

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