Household Debt Rises to $17.7T in Q1
Total household debt in the U.S. rose by $184 billion (1.1%) in the first quarter of 2024, reaching a record $17.69 trillion, according to the New York Fed’s Quarterly Report on Household Debt and Credit. This increase highlights both the resilience and the growing financial strains within American households.
The good news:
- Mortgage balances: Mortgage debt increased by $190 billion from the previous quarter, hitting $12.44 trillion by the end of March.
- HELOCs: Balances on home equity lines of credit (HELOC) rose by $16 billion, marking the eighth consecutive quarterly increase since Q1 2022, now totaling $376 billion.
- Mortgage originations: The pace of new mortgage originations remained steady, with $403 billion in new mortgages in the first quarter.
The bad news:
- Credit card balances: Despite a $14 billion decrease in credit card debt, bringing the total to $1.12 trillion, transition rates into serious delinquency (90+ days late) increased to 6.86%, up from 6.36% in the previous quarter and 4.57% a year ago.
- Overall delinquency: The total delinquency transition rate for all debt rose to 1.54%, up from 1.42% last quarter and 1.08% in Q1 2023.
All About Credit Cards:
- Joelle Scally, Regional Economic Principal, New York Fed: “An increasing number of borrowers missed credit card payments, revealing worsening financial distress among some households.”
- Liberty Street Economics blog, NY Fed economists: “New credit card delinquencies are disproportionately ascribable to maxed-out borrowers and their balances. The share of maxed-out borrowers has been increasing from pandemic lows and is approaching pre-pandemic levels, resulting in higher transition rates into credit card delinquency overall.”
Why it matters: The rise in household debt underscores the mixed financial health of American households. While mortgage growth indicates a strong housing market, rising credit card delinquencies suggest that many consumers are struggling with high-interest debt, potentially leading to broader economic implications.
Mortgage Rate Impact: Delinquencies aren’t inherently a problem. However, if they lead to a higher default rates that could cause lenders to tighten up their standards potentially impacting all types of borrowing.
