U.S. household debt passed the $17 trillion mark for the first time, according to data from the Federal Reserve Bank of New York.
The newly published Quarterly Report on Household Debt and Credit reported a $148 billion (0.9%) increase to $17.05 trillion by the end of the first quarter of this year. This level is $2.9 trillion higher than at the end of 2019, prior to the economic tumult brought by the pandemic.
Mortgage balances rose modestly by $121 billion in the first quarter of 2023 and stood at $12.04 trillion at the end of March while auto loan balances increased by $10 billion. Student loan balances were up slightly and are now at $1.60 trillion while credit card balances were flat during the quarter and are now at $986 billion.
Mortgage originations (including refinances), dropped in the first quarter to $324 billion, the lowest level seen since 2014. Limits on home equity lines of credit were up by $9 billion in the first quarter.
The New York Fed also issued an accompanying Liberty Street Economics blog post that examined housing equity and mortgage refinancing, and it found 14 million mortgages were refinanced during the pandemic refinancing boom, during which $430 billion of home equity was extracted through cash-out refinances. About 64% of these mortgages were “rate refinances”, resulting in an average payment reduction of $220 monthly for those borrowers.
“The mortgage refinancing boom is over, but its impact will be seen for decades to come,” said Andrew Haughwout, director of household and public policy research at the New York Fed. “As a result of significant equity drawdowns, mortgage borrowers reduced their annual payments by tens of billions of dollars, providing additional funding for spending or paydowns in other debt categories.”
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