(Reuters) - U.S. household debt rose to a record $15.84 trillion in the first quarter driven almost entirely by a $250 billion increase in home loan balances, but the rise was the smallest in a year and new mortgage and auto loan originations declined for a third straight quarter.
The Federal Reserve Bank of New York's quarterly household debt report released Tuesday showed mortgage debt climbed to $11.18 trillion at the end of March, and now accounts for 71% of total household debt, the highest share in roughly a decade.
But new loan originations - both for home purchases and refinancing of existing mortgages - fell to $859 billion, the lowest since the second quarter of 2020. They remain, however, more than $100 billion above the pre-pandemic level of the fourth quarter of 2019.
Still, the 17% drop was the largest in five years and was largely the product of a fall-off in demand for refinancings with borrowing costs climbing rapidly during the quarter as the Fed began hiking interest rates to combat inflation running at four-decade highs.
Auto loan originations also dipped for a third straight quarter to $177 billion, but was the highest level for any first-quarter period in the history of the series, which dates to 2003. Car loan balances increased by $11 billion to $1.47 trillion.
Credit card balances eased to $841 billion from $856 billion, and student loan debt edged up to $1.59 trillion from $1.58 trillion.
"The first quarter of 2022 saw an increase in mortgage and auto loan balances coupled with a typical seasonal decrease in credit card balances," said Andrew Haughwout, director of Household and Public Policy Research Division at the New York Fed. "However, mortgage originations declined from the historically high volumes seen in 2021, reflecting an unwinding in the demand for refinances."
The average contract rate on a 30-year fixed-rate mortgage shot up by more than 1.5 percentage points in the first three months of the year, according to the Mortgage Bankers Association. It has climbed further since, standing at 5.36% at the end of April, around the highest since 2009. MBA's weekly refinancing index stands near the lowest since 2018.
Overall delinquency rates were unchanged, the New York Fed said, but the report noted a slight uptick in newly delinquent loans, defined as those behind by 30 days or less. That rate rose to 2.12% from 2.03% the prior quarter, with the highest rate appearing among autos loans, up to 5.1% from 4.96%.
"Overall households are in very good shape," New York Fed researchers said on a call. "The picture overall looks very strong on the household side."