2023-05-20 10:40:27
Hassouna Al Tayeb (Abu Dhabi)
Despite the significant decline in housing loans, the US consumer debt exceeded $17 trillion during the first quarter of this year 2023.
The total debt, in all real estate categories, amounted to regarding $17.05 trillion, an increase of nearly $150 billion, or 0.9%, during the period from January to March of this year.
With this, the total debt exceeds the level it was in the period before the Covid-19 pandemic that ended in 2019, by regarding $ 2.9 trillion.
Mortgage
This increase came despite the fact that new mortgage transactions, including refinancing, totaled only $323.5 billion, the lowest level since the second quarter of 2014.
The total was less than it was during the last quarter of last year 2022, by regarding 35%, and by regarding 62% less than the same period in 2021.
New housing loans reached a record high in the second quarter of 2021 at $1.22 trillion, to begin a gradual decline since that time, as a result of the rise in interest rates.
A series of interest rate cuts implemented by the Federal Reserve contributed to a decline in the mortgage rate, to regarding 2.65% in January of 2021.
interest rates
However, the rate of interest rates at the present time, 6.4%, as a result of 10 operations enacted by the Central Bank, a total of 5%, with the aim of fighting inflation.
The rise in interest rates helped the total mortgage debt reach regarding $12.04 trillion, an increase of 1% over the last quarter of 2022.
Borrowers benefited from the two recent declines in interest rates, whether to buy new homes or to refinance mortgages, which witnessed a significant recovery.
However, despite the end of this recovery period, some sector experts confirm that its effects will continue for several decades to come. Data from the Federal Reserve indicate that regarding 14 million mortgages were refinanced during the Covid-19 pandemic period, which began in March 2020. And regarding 64% Of these, it was refinanced, with borrowers benefiting from lower interest rates. According to the bank, the average savings of these borrowers was $220 per month.
Property rights
As a result of the dramatic reductions in equity, mortgage borrowers have reduced their annual payments by tens of billions of dollars, providing additional funding for spending or down payments in other debt classes.
Aside from rising interest rates, mortgage foreclosures remained low. Late payment levels also increased for all types of debt, such as an increase of 0.6% for credit cards to 6.5% and regarding 0.2% for car loans to 6.9%.
The total late payment rates increased by 0.2% to 3%, marking the highest rate since the third quarter of 2020. Meanwhile, student debt increased to regarding $1.6 trillion, while car loans approached a similar amount estimated at $1.56 trillion.
1684605159
#consumer #debt #exceeds #trillion
