U.S. household debt increased to a record $16.15 trillion in the second quarter, driven mostly by a $207 billion jump in mortgage balances, with credit card and auto loan debt also rising as consumers lifted their borrowing to deal with soaring inflation, a Federal Reserve report showed on Tuesday, Reuters reported. Overall delinquency rates rose modestly too for all debt types, with delinquencies for credit cards and auto loans "creeping up," particularly in lower-income areas, the New York Fed's quarterly household debt report said. Mortgage debt increased to $11.39 trillion at the end of June, according to the report. Purchase mortgage originations were up 7% in the second quarter, with much of the increase attributed to higher borrowing amounts. The U.S. central bank began raising interest rates in March as it exited the easy money policies it had kept in place during the worst of the COVID-19 pandemic to shield an economy pummeled by lockdowns and other protective measures. Since then, stubbornly high inflation running at four-decade highs has compelled policymakers to raise the Fed's benchmark overnight lending rate by 225 basis points. That rate is currently in a target range between 2.25% and 2.50%. Further interest rate increases are forecast for the rest of this year as the central bank attempts to quash inflation that is sapping the pocketbooks of Americans.
