No surprise here: the New York Fed released its Q1 report on household debt and the US recorded a record-high debt level of $17 trillion.

Among other concerning stats in the report, according to Cassandra Cassidy’s recent Morning Brew article, Consumer debt balloons to historic high, is credit card balances “remained flat over Q1, suggesting that people aren’t cutting back and are probably using credit cards to finance daily spending” due to rising costs.

Another major outlier in the report is the increase in auto balances by $10 billion in Q1. Typically, auto balances decline in first quarters, according to the NY Fed’s breakdown of the report.

Delinquencies are also up across the board, with 4.57% of credit card accounts flowing into “Serious Delinquency” (90 days or more past-due). Perhaps more concerningly though, is that more mortgage and auto debts (secured loans) are flowing into serious delinquency. We’ve covered before how that should be an economic alarm bell, because housing and auto loans typically sit atop a consumer’s payment hierarchy.

You might think: wow, this is the perfect storm for an economic disaster. But there is one saving grace, according to the report.

There were an incredible amount of mortgage refinances during the pandemic. Fourteen million, to be exact. And most of those refinances brought borrowers’ mortgage payments down an average of $220 per month, leaving consumers with additional funds for spending or making payments on other debts.

“The mortgage refinancing boom is over, but its impact will be seen for decades to come, said Andrew Haughwout, Director of Household and Public Policy Research at the New York Fed.

Still, collections & recovery executives need to be concerned about leaps in delinquency rates, especially since many collections strategies were scaled down during the pandemic. For some quick and comprehensive guidance on how to jump start your collections & recovery strategies, check out these articles:

3 Keys to an Effective Third-Party Collections Strategy in 2023

Evaluating Your Collections Strategy? Here are Three Things You Need to Know.

3 Serious Challenges with Collecting Past-Due Debt and How to Solve Them

The Complete Guide to Debt Sale in 2023

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