NY Fed: Consumer Debt Rises in Third Quarter on Strong Demand, High Inflation
By Reuters
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Nov. 15, 2022, at 11:06 a.m.
By Michael S. Derby
(Reuters) - Americans continued to take on debt during the fourth quarter amid a surge in credit card borrowing, even as they backed away from new mortgages in a rapidly rising interest rate environment, the Federal Reserve Bank of New York said Tuesday.
The bank said in its quarterly report on household debt and credit that total borrowing during the third quarter increased by $351 billion from the prior quarter to $16.51 trillion. Overall borrowing is $2.36 trillion higher than the level seen at the end of 2019, before the coronavirus pandemic struck and scrambled the economy.
“Credit card, mortgage, and auto loan balances continued to increase in the third quarter of 2022 reflecting a combination of robust consumer demand and higher prices,” said Donghoon Lee, a New York Fed research advisor, in a press release. "However, new mortgage originations have slowed to pre-pandemic levels amid rising interest rates.”
The researchers flagged high car prices, more expensive homes and elevated gasoline prices as all having helped push up how much Americans have been borrowing.
The report said that mortgage originations, which include refinancing existing loans, fell by $126 billion from the second quarter and stood at $633 billion during the third quarter. The bank said that current activity in the market to create new mortgages resembles the conditions seen before the pandemic struck. It also said that home foreclosure rates remained low.
That said, overall mortgage debt during the third quarter rose by $282 billion and hit $11.67 trillion at the end of September, the New York Fed said.
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https://money.usnews.com/investing/news/articles/2022-11-15/ny-fed-consumer-debt-rises-in-third-quarter-on-strong-demand-high-inflation
