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U.S. household debt levels rose in the first quarter of 2024, creating new challenges for already stressed credit card borrowers, according to a new report. federal reserve bank It was released on Tuesday in New York.
Overall debt levels increased by $184 billion, or 1.1%, in the first quarter to a total of $17.69 trillion, the report said.whole borrowing level That’s an increase of $3.5 trillion from the end of 2019, before the coronavirus pandemic began.
Of this, mortgage loan balances increased by $190 billion to $12.44 trillion, while overall credit card balances decreased by $14 billion to $1.12 trillion at the end of the quarter. However, despite that decline, credit card balances increased by 13.1% year over year.
The report also shows that more borrowers are in financial stress, with the overall delinquency rate reaching 3.2% in the first quarter of 2024, slightly higher than the 3.1% recorded in the first quarter of 2023. It was also revealed that
Almost half of Americans say finances have a negative impact on their mental health
More borrowers are experiencing financial stress, according to a new report from the New York Fed. (license/image)
The report noted that the delinquency rate increased in the most recent quarter, but remains below the 4.7% seen at the end of 2019, before the delinquency. COVID pandemic Began.
The New York Fed report also points to several areas where consumer power is waning. Debt delinquency levels rose across all borrowing types in the first quarter, with 8.9% of credit card accounts and 7.9% of auto loan accounts moving into problem status. The report added that early mortgage delinquency rates remain “low” by historical standards.
Joel Scully, head of regional economics in the Household and Public Policy Research Division at the New York Fed, said, “The number of borrowers who are delinquent on their credit card payments is increasing, deepening financial hardship for some households.” has become clear.”
Americans are carrying record amounts of household debt
Credit card delinquencies and debt types moving to “questionable” status increased in the first quarter. (license/image)
of new york fed bank In a blog post about the report, it added that credit card borrowers facing the most stress are those who have exhausted their total borrowing capacity.
“The proportion of borrowers who have reached their credit limit has increased from the pandemic lows and is approaching pre-pandemic levels,” the bank’s economists wrote.
“The rate of maxed-out borrowers moving into delinquency is significantly higher than before the pandemic, resulting in an overall higher rate of moving into credit card delinquency,” the researchers wrote. also pointed out that if current trends continue, overall credit problems will increase. card account.
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Federal Reserve Chairman Jerome Powell has indicated that interest rates will continue to rise until inflation subsides. (Win McNamee/Getty Images/Getty Images)
The Federal Reserve’s interest rate hikes aimed at curbing inflation have increased borrowing costs for homebuyers and credit card users.of benchmark federal funds rateInterest rates, which affect mortgage and credit card interest rates, have been in a target range of 5.25% and 5.5% since July last year, the highest level in 23 years.
Rising interest rates have also increased costs for borrowers, the New York Fed noted. american consumer It has a strong balance sheet and generally remains in a solid position.
Reuters contributed to this report.
