US household debt increased by 2% to $16.2 trillion in the second
quarter, with mortgages, auto loans, and credit-card balances all
seeing sizable increases, according to a report by the New York
Federal Reserve Bank.

The increase in borrowing, which equals $312 billion over three
months, is reflected in part in higher prices for homes and cars.
Americans also are putting more on their credit cards to cover rising
costs amid decades-high inflation.

The main driver was mortgage debt, which accounted for two-thirds of
the rise last quarter. And the 13% jump in credit-card debt
year-over-year was the sharpest gain in more than 20 years, the New
York Fed said in its quarterly report on household debt and credit.

“While household balance sheets overall appear to be in a strong
position, we are seeing rising delinquencies among subprime and
low-income borrowers with rates approaching pre-pandemic levels,” said
Joelle Scally, administrator of the Center for Microeconomic Data at
the New York Fed.

Consumers added a record $100 billion in credit-card debt over the
last year. But in aggregate, consumers still have plenty of room to
spend with another $3.33 trillion in available credit on their cards.

Since the pandemic started, about 42 million new credit card accounts
have been opened, and consumers now hold more than 750 million
auto-loan, credit card, mortgage, and home-equity lines of credit.
Overall, consumers ages 30 to 59 have record levels of debt.

Overall, about $435 billion of the $16.2 trillion in debt is
delinquent, and $294 billion is seriously delinquent, meaning that
it’s at least 90 days late.

“With the supportive policies of the pandemic mostly in the past,
there are pockets of borrowers who are beginning to show some distress
on their debt,” Fed researchers said in a blog post that accompanied
the report. “When we break these out by neighborhood income using
borrower zip code, we observe that the delinquency transition rates
for credit cards and auto loans are creeping up, particularly in
lower-income areas.”