The mortgage refinancing boom is winding down and household debt levels are creeping up as consumers edge past the worst of the pandemic’s economic shock.
Mortgage originations dropped sharply in the primary quarter of 2022 compared with their 2021 peak, in line with a quarterly report on household debt that the Federal Reserve Bank of Latest York released Tuesday.
Last yr’s spike was fueled by refinancings from homeowners chasing exceptionally low rates; as rates have risen, demand has cooled. But the general amount of mortgage debt for brand new purchases is usually rising, with soaring home prices forcing buyers to borrow more for his or her homes.
Consumers are comfortably managing their bills, and the deepest distress signals are hovering at historically low levels, the report said. Around 6 percent of consumers have an account in collections listed on their credit reports, far lower than the double-digit rates that were common within the wake of the Great Recession.
And bankruptcy filings are at a two-decade low: Latest bankruptcy notices in a national sample drawn from Equifax credit reports hit their lowest level for the reason that Latest York Fed began tracking them in 1999.
Bank card balances fell $15 billion from the previous quarter — a typical seasonal drop after year-end holiday spending — but were $71 billion higher than a yr earlier, as consumer spending stayed strong. And lenders are anticipating still more: The overall amount of credit Americans have available on their cards rose last quarter to $4.12 trillion, nearly 6 percent higher than its prepandemic level.
American Express said last month that spending on its cards set a record in March, driven especially by pent-up demand for business and leisure travel. Within the yr’s first quarter, banks eased their standards for card and auto loans and reported stronger consumer demand for credit, in line with a Federal Reserve survey released on Monday.