Higher mortgage rates are the “main driver” for a 2% rise in consumer debt, Bloomberg reported, quoting data from the New York Federal Reserve Bank.
U.S. household debt increased to $16.2 trillion in the second quarter, with mortgages, auto loans and credit-card balances all seeing sizable increases, the article said. The increase equals $312 billion over three months and reflected higher home and vehicle prices.
The main driver was mortgage debt, which accounted for two-thirds of the rise last quarter, the article said. “Rising delinquencies among subprime and low-income borrowers with rates are approaching pre-pandemic levels,” Joelle Scally, administrator of the Center for Microeconomic Data at the New York Fed told Bloomberg.
Pandemic relief measures gave relief to many over the last two years, but as those relief measures have ended, people are showing “signs of distress.”
Overall, about $435 billion of the $16.2 trillion in debt is delinquent, and $294 billion is seriously delinquent (at least 90 days late), according to the article.