Key facts
- US consumers increased credit card and home equity balances in Q2.
- Auto loan originations reached a record nominal high of $211 billion in Q2.
- Overall consumer debt decreased slightly to $18.8 trillion due to mortgage data reporting changes.
- Overall delinquency rates across all credit types fell slightly to 4.7% in Q2.
- Credit card delinquency rates have stabilized but remain elevated compared to pre-pandemic levels.
U.S. consumers significantly increased their auto loan balances in the second quarter, reaching a record nominal high, while also boosting credit card and home equity debt, according to a New York Fed report. Despite a slight overall decrease in consumer debt to $18.8 trillion, attributed to changes in mortgage data reporting, household finances are showing resilience. The report indicated a $19 billion rise in home equity loans, a trend driven by older homeowners seeking to avoid high current mortgage rates. Auto loan originations hit a record $211 billion, though this figure is not inflation-adjusted. Researchers from the New York Fed noted that while credit card delinquency rates remain elevated compared to pre-pandemic levels, they have stabilized over the past two years. This stabilization is partly due to lenders holding onto charged-off debts for longer periods, rather than a fundamental increase in new delinquencies. Overall delinquency rates across all credit types saw a slight decrease to 4.7% from 4.8% in the previous quarter. Analysis from the Bank of America Institute for July data showed solid credit card spending, even excluding gas, with a notable convergence in spending rates across different income groups, suggesting a lessening of 'K-shaped' economic dynamics. Consumer financial health appears robust, with a rising share of households paying off credit card bills in full and little sign of significant savings depletion.