US household debt increased during the first quarter of 2023, hitting $17.05 trillion – the highest amount on record, according to a recent report by the New York Federal Reserve.
Mortgage balances increased by $121 billion during the first quarter of 2023 and stood at $12.04 trillion at the end of March. Home equity lines of credit, or HELOCs, increased by $3 billion, the fourth consecutive quarterly increase following a nearly 13-year declining trend. HELOCs now total $339 billion.
Credit card balances were flat in Q1 2023 at $986 billion.
Auto loan balances increased by $10 billion in Q1.
Other balances, which include retail cards and other consumer loans, increased by $5 billion. Student loan balances now stand at $1.60 trillion, up by $9 billion from the previous quarter. In total, non-housing balances grew by $24 billion.
The Fed report said that mortgage originations dropped sharply during the first three months of the year to $324 billion or the lowest amount since Q2 of 2014.
During historically low-interest rates, there was a mortgage refinance boom. That has ended and high rates are having an impact on home sales as well as refinancing.
Some pundits predict a forthcoming recession and some expect the Fed to cut interest rates later this year. What is clear, is the Fed will stick to its 2% inflation rate target which will require a rise in unemployment.