The Macomb Daily
Household debt surges as young borrowers struggle with loans
U.S. household debt soared by the biggest amount in two decades in the fourth quarter, with younger borrowers in particular struggling to make loan payments amid high inflation and interest rates.
Households added $394 billion in overall debt, the largest nominal increase in 20 years, bringing the total to a record $16.9 trillion, according to data released by the Federal Reserve Bank of New York on Thursday.
Mortgage balances, the biggest form of debt for American families, drove the increase.
But debt grew across the board, with credit cards seeing the biggest jump in data going back to 1999, New York Fed economists said in a blog post. Delinquencies picked up, with borrowers reaching 90 days or more of delinquency at a higher rate than they did before the pandemic.
“This is particularly concerning for younger borrowers who are disproportionately likely to hold federal student loans that are still in administrative forebearance,” the economists said in the post. “Once payments of those loans resume later this year under current plans, millions of younger borrowers will add another monthly payment to their debt obligations, potentially driving these delinquency rates even higher.”
People in their 20s and 30s are also leading among borrowers having trouble meeting auto-loan payments.
The overall share of borrowers who are in delinquency remains below prepandemic levels. But the rate of people becoming delinquent is rising fast, suggesting a rapid return to pre-Covid trends for creditcard and auto-loan borrowers, according to the blog post.