U.S. household debt moves above pre-pandemic levels

May 15 (UPI) -- Total household debt in the U.S. economy is nearly $3 trillion higher than 2019, before the onset of the COVID-19 pandemic, the Federal Reserve Bank of New York reported Monday.

The New York Fed reported that household debt increased 0.9% from the fourth quarter to reach $17.05 trillion during the three months ending in March.

"Balances now stand $2.9 trillion higher than at the end of 2019, before the pandemic recession," the Fed reported.

An uptick in consumer debt would be expected given lingering inflationary pressures and the end of stimulus packages that supported the U.S. consumer and the broader economy during the depths of the pandemic, when economic activity ground to a halt due to pre-vaccine restrictions.

For most types of debt, meanwhile, the Fed found consumers are increasingly late on their payments. Delinquencies for credit cards increased by 0.6% and late payments on auto loans jumped by 0.2%, putting both figures above pre-pandemic levels.

Credit and auto-loan delinquencies increased more than any other type of debt, based on the percent of debt payments that were more than 90 days late.

Elsewhere, student loan balances increased "slightly," the Fed said, to $1.6 trillion, though less than 1% of that debt was in default or more than 90 days delinquent. Part of that was attributed to a so-called "fresh start" program, which made defaulted loan balances current.

With lending rates higher than a year ago, the Fed found that mortgage balances increased "modestly," by $121 billion in the first quarter, to reach $12.04 trillion by the end of March. Many people were able to refinance existing mortgages to a lower rate in the past, however, which shaved about $220 off monthly payments on average.

Andrew Haughwout, the director of household and public policy research at the New York Fed, said a wave of refinancing has come to an end, however, as the U.S. central bank continues to hike lending rates to curb inflation, though what's already been refinanced led to more discretionary cash.

"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," he added.

As a result, the Fed added, the level of foreclosures remains low.