Krishen Rangasamy, Research Analyst at NBF, suggests that monetary policy tightening by the Federal Reserve seems to be having the desired effects and while U.S. household debt hit a new record of US$13.2 trillion at the end of the first quarter, its pace of growth softened to just 3.8% year-on-year, the weakest since 2016.
“Here the deceleration isn’t just about mortgages (which accounts for two-thirds of total household debt) but is instead generalized, with auto loans (+5.3% y/y) and student debt (+4.7% y/y) both growing at the slowest pace in years. The slowdown of household leveraging isn’t all about rising interest rates. Tighter lending standards, particularly for mortgages and auto loans, have also been instrumental in reducing the pace of debt accumulation.”
“In Q1 a third of auto loan origination (the highest share in 7 years) and nearly 60% of mortgage origination went to borrowers with the highest credit scores.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.