Total household debt increased 0.6 percent to $17.80 trillion in the second quarter of the year, according to the Federal Reserve Bank of New York Center for Microeconomic Data.
Credit card balances increased $27 billion to $1.14 trillion, while auto loan balances increased $10 billion to $1.63 trillion. Aggregate credit card account limits increased 1.4 percent from the first quarter to $69 billion.
Aggregate delinquency rates were similar to the first quarter, with 3.2 percent of outstanding debt in delinquency. Slight increases were reported in delinquency transition rates for credit cards, auto loans and mortgages. Nine percent of credit card balances and 8 percent of auto loan balances transitioned into delinquency in the second quarter of the year, according to the New York Fed.
The report was released one week after the Federal Open Market Committee kept its main interest rate at 5.25-5.50 percent as analysts expect the FOMC will in September cut interest rates for the first time in four years. Federal Reserve Chair Jerome Powell is citing progress toward lower inflation as well as a cooler labor market that could no longer overheat the economy.
Mortgage balances increased $77 billion from the previous quarter, reaching $12.52 trillion by the end of June. Mortgage originations increased at roughly the same pace as the previous four quarters, to $374 billion. Home equity lines of credit balances increased for the ninth straight quarter, up $4 billion to $380 billion.
Early delinquency transition rates for mortgages slightly increased but remained low by historical standards. Approximately 136,000 consumers had a bankruptcy notation added to their credit reports in the second quarter, up from the previous quarter but similar to pre-pandemic seasonal averages.
“The volume of mortgage originations remained low, primarily due to subdued refinancing activity,” said Andrew Haughwout, director of household and public policy research at the New York Fed. “Homeowners continued to increase HELOC balances as an alternative way to extract home equity.”
