Americans are continuing to borrow money despite rising interest rates, sending household debt up $266 billion (1.7%) in the first quarter of 2022, according to the Federal Reserve Bank of New York's Household Debt and Credit Report.
Mortgage balances hit $11.18 trillion by the end of March, the report stated, rising by $250 billion in Q1. Loan balances are $1.7 trillion higher when compared to the end of 2019, the report added, which was just before the COVID-19 pandemic began.
"The first quarter of 2022 saw an increase in mortgage and auto loan balances coupled with a typical seasonal decrease in credit card balances," said Andrew Haughwout, the New York Fed's director of household and public policy research division. "However, mortgage originations declined from the historically high volumes seen in 2021, reflecting an unwinding in the demand for refinances."
If you are interested in lowering your mortgage rate, you might consider taking out a refinance. Credible's free online tool can help you easily compare multiple lenders at once and determine if this is the right financial option for you.
Credit card balances drop in Q1: NY Fed
The NY Fed's report showed that credit card debt dropped by $15 billion in the first quarter, while other forms of credit increased. However, credit card balances are still $71 billion higher than they were in the first quarter of 2021, a substantial annual increase.
Borrowers also appear to be less interested in taking out new credit in recent months. The number of credit inquiries — which indicate demand of consumer credit — within the past six months was at 109 million, according to the report, a drop of 5.1% compared with the previous quarter.
In total, 229 million new accounts were opened in the first quarter, a rise from Q4 2021 and slightly higher than typical pre-pandemic levels.
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Student loan debt balances surge
After mortgage debt, student loan debt saw the highest increase in debt balances in the first quarter, the report indicated.
Such debt grew to $1.59 trillion during that time, up $14 billion from the fourth quarter last year. This marked a new record high for student loan debt levels, and accounted for about 10% of total household debt in the first quarter.
If you'd like to learn more about student loan refinancing, consider contacting Credible to speak to a student loan expert and get all of your questions answered.
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