Consumer Debt Hits New Record as Delinquencies Rise

February 21, 2023

Consumers racked up debt at the end of 2022, bringing the nation’s collective balances to a record high while delinquency rates rose for several types of loans, according to a new report from the New York Federal Reserve.

Debt across all categories climbed to $16.9 trillion by the year’s end, an increase of $1.3 trillion from a year ago, as balances rose across all major categories.

Despite the downturn in the housing market and fewer originations amid surging mortgage rates, mortgage balances continued to climb to a new record high of $11.9 trillion, an increase of roughly $1 trillion from a year earlier. Originations for new home loans and refinancing fell to $498 billion in the fourth quarter of 2022, less than half of where they were in the fourth quarter of 2021 and down nearly $135 billion from the previous quarter.

Credit card balances increased nearly 6.6% to $986 billion during the fourth quarter. That’s the fastest quarterly growth on record, according to New York Fed data that goes back to 1999. On an annual basis, credit card balances grew by 15.2%.

While total delinquency levels have remained lower than historic averages– just 2.5% of outstanding debt was in some stage of delinquency at the end of 2022, compared with 4.7% at the end of 2019– the fact that delinquency rates are climbing despite the robust labor market is concerning, New York Fed researchers said.

“Although historically low unemployment has kept consumers’ financial footing generally strong, stubbornly high prices and climbing interest rates may be testing some borrowers’ ability to repay their debts,” Wilbert van der Klaauw, economic research adviser at the New York Fed, said in a statement.

Read all Blog posts