NY Fed: Mortgage Originations Dropped, Debt Delinquencies Rose in Q1

Mortgage originations dropped and debt delinquencies rose during the first quarter.

These trends happened as total household debt rose $148 billion, or 0.9%, in the first quarter, according to the “ Quarterly Report on Household Debt and Credit ” released Monday (May 15) by the Federal Reserve Bank of New York ’s Center for Microeconomic Data.

With that rise, the total reached $17.05 trillion, the New York Fed said in a press release about the report.

“Balances now stand $2.9 trillion higher than at the end of 2019, before the pandemic recession,” the release said.

Mortgage debt rose “modestly” by $121 billion, credit card balances were flat, auto loan balances increased by $10 billion, student loan balances increased “slightly” by $9 billion, and other balances — a category that includes other consumer loans — increased by $5 billion, according to the release.

The release noted that the increase in auto loan balances bucked “the typical trend of balance declines in first quarters.”

Mortgage originations dropped sharply during the first quarter to the lowest level seen since 2014. Auto loan originations decreased from the highs seen during the pandemic but remained higher than they were before the pandemic, according to the release.

“With the pandemic era refinance boom over and a slowdown in home sales, both refinance and purchase mortgage originations declined substantially in the first quarter,” the release said.

The share of current debt becoming delinquent increased for most debt types, with the delinquency transition rate for credit cards rising by 0.6 percent points and that for auto loans increasing by 0.2 percentage points — “respectively approaching or surpassing their pre-pandemic levels,” the release said.

As PYMNTS reported Monday, the rising delinquency rates dovetail with PYMNTS’ findings that credit cards have been a lifeline in managing daily expenses, but it’s getting harder to keep up with those obligations.

The release noted that the “pandemic refinancing boom” is over following a period in which 14 million mortgages were refinanced, with about 64% of them being “rate refinances” in which borrowers reduced their payments.

“The mortgage refinancing boom is over, but its impact will be seen for decades to come,” Andrew Haughwout , director of household and public policy research at the New York Fed, said in the release. “As a result of significant equity drawdowns, mortgage borrowers reduced their annual payments by tens of billions of dollars, providing additional funding for spending or paydowns in other debt categories.”