The Federal Reserve Bank of New York’s Center for Microeconomic Data issued its Quarterly Report on Household Debt and Credit today. For the fourth quarter of 2023, mortgage debt increased to $12.25 trillion.
Mortgage originations continue on their steady path. The report says originations, measured as appearances of new mortgages on consumer credit reports and including both refinance and purchase originations, continued at the same pace observed in the previous two quarters, at $394 billion in the fourth quarter. That number is well below the trillion-dollar-plus quarterly origination volumes observed between the second quarter of 2020 and the fourth quarter of 2021.
Mortgage balances rose by $112 billion from the previous quarter and stood at $12.25 trillion at the end of December. Balances on home equity lines of credit (HELOC) increased by $11 billion, the seventh consecutive quarterly increase after Q1 2022, and now stand at $360 billion. Limits on HELOC grew by $24 billion and have grown by 10% over the past two years after 10 years of observed declines.
The report shows total household debt increased by $212 billion (1.2%) in the fourth quarter of 2023 to $17.50 trillion. The report is based on data from the New York Fed’s nationally representative Consumer Credit Panel.
There are storm clouds on the consumer credit horizon. “Credit card and auto loan transitions into delinquency are still rising above pre-pandemic levels,” said Wilbert van der Klaauw, economic research advisor at the New York Fed. “This signals increased financial stress, especially among younger and lower-income households.”
Aggregate delinquency rates increased in Q4 2023, with 3.1% of outstanding debt in some stage of delinquency at the end of December. Delinquency transition rates increased for all debt types, except for student loans. Annualized, approximately 8.5% of credit card balances and 7.7% of auto loans transitioned into delinquency. Delinquency transition rates for mortgages increased by 0.2 percentage points yet remain low by historical standards. Serious credit card delinquencies increased across all age groups, notably with younger borrowers surpassing pre-pandemic levels.
