Americans are shrugging off any concerns – real or perceived – about the economy when it comes to borrowing.
According to statistics released this week by the New York Fed, U.S. consumers not only took out a record amount in car loans, but also increased their credit card and home equity balances. The NY Fed report was released Tuesday.
Though overall consumer debt fell slightly to $18.8 trillion in the April-June period, the decline was linked to a change in how mortgage data is reported, with a decline in mortgage debt in the second quarter expected to be offset by a similar jump in the next report, according to a report from Reuters.
According to the Reuters report, the $19 billion rise in home equity loans is part of a now four-year trend that Fed researchers see as part of a substitution among older homeowners who want to avoid the current high mortgage rates that would be associated with a full refinancing.
The $211 billion in auto loan originations was a record, but only in nominal, not inflation-adjusted terms, Reuters reported. A surge of auto purchases during the COVID-19 pandemic in 2021 also led to quarterly auto borrowing of around $200 billion, but also pushed up prices.
The overall delinquency rate fell in the second quarter in a sign that household balance sheets on average remain resilient despite a decline in inflation-adjusted incomes.
In a blog post accompanying the New York Fed’s report, staff economists said credit card delinquency rates in particular, while still elevated compared to the period before the pandemic, appear to have stabilized, according to Reuters.
“When the question is ‘how are households doing right now?’… the pace of credit card delinquency is elevated but has been largely stable since 2024,” with about 7% of balances flowing into delinquency from one quarter to the next, researchers in the Fed report concluded.
