Newsletter - March 2023
As inflation continues to affect the country, many Americans are turning to credit cards and home equity lines of credit (HELOC) in order to find relief from the rising costs of basic needs, like groceries and gas.
According to the Federal Reserve Bank of New York, the current national credit card debt is nearing $1 trillion – the highest it’s ever been. The report shows an increase of $61 billion from the pre-pandemic total of $927 billion to $986 billion in the fourth quarter of 2022.
Concurrently, delinquencies in credit card payments have escalated as individuals struggle to pay off debt strangled by super-high interest rates. According to Bankrate, the average credit card rate is currently 19.91%.
“Although historically low unemployment has kept consumer’s financial footing generally strong, stubbornly high prices and climbing interest rates may be testing some borrowers’ ability to repay their debts,” Wilbert van der Klaauw, an economic research advisor with the Federal Reserve Bank of New York, said.
Additionally, Experian noted that in 2021, American cardholders had an average credit card balance of $5,221. But the climbing debt numbers aren’t only shown in credit cards; reports are saying that the national debt totals are extending into all areas, including auto and home loans.
Total household debt has risen 2.4%: mortgage balances increased to $11.92 trillion, car loan balances increased to $1.55 trillion and student loan balances rose to $1.60 trillion.
Unfortunately, as a last resort, homeowners are now turning to tapping into their home equity to help cover these debts and keep up with higher living expenses.
Home equity lines of credit balances rose by $14 billion during the fourth quarter of 2022. This increase marks the third consecutive quarterly increase as well as the largest rise in HELOC balances in over a decade.
Compounding the problem are fluctuating interest rates on these loans. Unlike fixed-rate home equity loans, HELOC’s have variable interest rates and are susceptible to increases at any moment.
If home values plumet in the next 12-24 months, homeowners could experience a turn for the worse in their finances as they will be paying off a higher mortgage than their property is actually worth.
Be prepared for any outcome in the housing market, and keep following us for more key financial information. Blue Streak Doc is available to manage your document retrieval and property reports to help protect your portfolio. Give us a try and get your 5th order FREE!
Employee Of The Month
Congratulations to Charlotte, our VP of Quality Control for winning Employee of the Month. Charlotte always strives to keep our staff fully trained. In this ever changing industry she’s able to switch gears on a dime to handle any new request our clients might have and help make sure our staff is ready to handle any project needed.
No matter what is needed Charlotte always makes the customer experience her top priority and goes above and beyond each and every day to help ensure they are provided the superior product they are accustomed to.