Household debt exceeded $15 trillion for the first time in the third quarter, as increasing prices pushed up balances for homes and autos, the New York Federal Reserve announced Tuesday.
Mortgages increased 2.2% to approximately $10.7 trillion, and autos raised $28 billion as a component of an overall $286 billion rise in debt, bringing the total household weight to $15.24 trillion. That’s higher 1.9%, or $286 billion, from the second quarter.
The household debt growth described a 6.2% gain from the corresponding period a year ago.
The report included the July to September period, part of a time when U.S. economic growth reduced to a 2% yearly pace amid concerns over rising inflation and an epidemic-induced slowdown.
The Fed report stated that housing debt stimulated with $1.11 trillion in newly originated mortgages. More than two-thirds originated from those with credit scores over 760 and only 2% to subprime borrowers. As stated by the Census Bureau, the trend appears with median housing prices higher 19.9% for the quarter to higher than $404,700.
According to the report, education loan debt increased by $14 billion to $1.58 trillion as students moved back to college. Just 5.3% of the loans were in severe delinquent, or default status as a government restraint program extends throughout Jan. 31.
Delinquency rates remain low
Notwithstanding concerns over growth, credit card balances rose by $17 billion to about $800 billion for the quarter. They turned a trend that started with the epidemic as consumers paid down revolving debt.
Officials emphasized that even with the increasing debt loads, delinquency rates continue to decline. This happened because of an influx of government payments that have led to raised savings and personal income levels.
The report stated that credit scores for mortgage originations continue very high, even though they have decreased slightly following the epidemic’s early days.
Newly introduced auto loans calculated $199 billion. This is a slight drop from the previous quarter’s pace contemplative of higher loan amounts rather than a higher volume. As stated in Labor Department data, new auto prices increased 8.7% in September from a year ago, while used car and truck prices rose 24.4%.
Consumers notice escalating inflation ahead.
A separate report Monday from the New York Fed noted that inflation expectations over the three-month horizon were at 4.2%. However, the one-year outlook regards prices increased 5.7%, the most distinguished in a data series that stretches 2013.