Home » Today’s mortgage rate is 6.77% and U.S. household debt climbed to $16.90 trillion
Today’s mortgage rate is 6.77%, according to Bankrate’s national survey of large lenders . If you’re looking to refinance your current loan, the national average 30-year fixed refinance rate is 6.87%, increasing 25 basis points from a week ago .
The 20-year fixed rate is 6.375%, and the VA and FHA 30-year fixed rates are 6.125% . However, these rates are sample rates based on assumptions, and the exact rate you receive may be different . It’s important to shop around and compare various mortgage offers before committing to a loan, as rates can change rapidly.
U.S. household debt climbed to a record in 20 years
U.S. household debt jumped to a record $16.90 trillion from October through December last year, the largest quarterly increase in 20 years, according to the Federal Reserve’s quarterly household debt report. This increase can be largely attributed to the interest rates hikes that the Fed has implemented in an effort to cool the economy and reduce the risk of recession. Meanwhile, delinquency rates for credit cards, auto loans, and mortgages have all increased, indicating that some borrowers are struggling to make repayments.
Americans’ collective credit card balances totaled $986 billion at the end of last year, up $61 billion from the previous quarter, and about 18.3 million Americans were behind on their credit card payments in 2022, up from 15.8 in 2019. Younger Americans are more likely to struggle with credit card debt, and delinquency rates are ticking up.
The increased cost of gas and groceries on Americans’ credit cards may be putting them in a difficult position, particularly when considering that younger borrowers are more likely to have student loan debt that is currently under a payment pause. The threat of a recession is also a concern, and researchers are watching closely to see if delinquencies will rise even if the unemployment rate stays at these very low historical levels.
Mortgage demand dropped last week as mortgage rates increased , pushing higher across the board due to market expectations that inflation will persist . Applications to refinance a home loan dropped 13% for the week and were 76% lower than the same week one year ago , while applications to purchase a home fell 6% for the week and were 43% lower than the same week a year ago .
Despite this decrease in demand, real estate agents across the country are reporting a jump in buyer demand in the past few weeks, potentially signaling an early start to the historically busy spring market .
Simpson notes that many people are taking on more debt than they can realistically pay back. He cautions that this can lead to a dangerous situation, as interest rates can quickly add up and create a spiral of debt that is difficult to escape.
Simpson recommends that individuals should be mindful of their financial situation and have a plan to pay off their debt as soon as possible. He also suggests that individuals should be aware of the risks associated with taking on large amounts of debt and avoid taking on more than they can handle.
Overall, Simpson emphasizes the importance of financial literacy and being aware of the associated risks when taking on debt. He believes that if individuals are more knowledgeable about their finances and make prudent financial decisions, they will avoid major pitfalls such as excessive debt and high interest rates.
FAQs about Consumer Debt
What is consumer debt?
Consumer debt is any type of debt that is incurred by an individual to purchase goods or services for personal use. This includes credit card debt, student loans, auto loans, medical debt, and other types of loans. Consumer debt does not include business-related debts or mortgages.
How does consumer debt affect my credit score?
Your credit score can be affected both positively and negatively by consumer debt. If you manage your debt responsibly and make timely payments, it can help improve your credit score. However, if you fall behind on payments or miss them altogether, it can have a negative impact on your credit score.
What are the risks associated with consumer debt?
The primary risk associated with consumer debt is the potential for defaulting on payments. When this happens, you may face late payment fees, higher interest rates, or even legal action taken against you. Additionally, carrying too much consumer debt can make it difficult to save money or make larger purchases in the future, such as buying a home.
How can I manage my consumer debt?
One of the best ways to manage your consumer debt is to create a budget and track your expenses. This will help you identify areas where you can cut back on spending and allocate more money towards paying down your debt. Additionally, if possible, try to pay more than the minimum payment each month to reduce your principal balance faster. Lastly, consider speaking to a financial advisor or credit counseling service if you need assistance with reducing your debt.
Aneta is a staff writer covering money content, including personal finances, savings accounts, taxes, loans, mortgages, credit cards, interest rates and insurances for FintechZoom. Contact: [email protected].