“Rising Debt in America: A Comprehensive Look at 2023”

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Overall Debt Levels Slow but Still Increase

Consumers in the United States owed $17.1 trillion in total debt as of the third quarter (Q3) of 2023, according to Experian data. This represents a 4.4% increase from 2022’s $16.38 trillion total. Although the growth rate has slowed compared to the 7% increase from 2021 to 2022, debt levels continue to rise.

Mortgage debt, which makes up nearly two-thirds of all consumer debt, grew by 3.2% to $11.6 trillion as of Q3 2023. High mortgage rates and a limited housing supply have discouraged both new homebuyers and existing homeowners from entering the market.

Southern States See Higher Growth in Average Consumer Debt Balance

In 2023, average debt balances increased in every state, with Southern states experiencing the highest growth. States like Alabama, Florida, North Carolina, Oklahoma, South Carolina, and Texas saw average total debt balances increase by 4% or more, compared to the national average of 2.3% growth.

Average Overall Debt Increased Most for Those With Poor Credit

Consumers with poor credit saw their debt balances increase significantly from 2022, more than 20%. These consumers already faced high borrowing costs, which were further exacerbated by rising interest rates. Many also owe additional fees due to falling behind on credit payments.

Older Generations Shed Some Debt While Younger Consumers Carry More

In 2023, older consumers began to reduce their overall debt, while millennials and Generation Z saw their debt balances grow by 8% and 15.4%, respectively. Generation X registered a modest increase of 1.9% in 2023.

Mortgage Debt Increases Alongside Higher Mortgage Rates

Despite a subdued housing market, home prices remain elevated. Most new homeowners are paying significantly more in mortgage interest than their more established neighbors. Average mortgage debt balances saw a relatively modest increase, even as average mortgage rates more than doubled.

Auto Loan Debt Moderates for Most Generations

While cars remain costly to buy, insure, repair, and drive, the automotive market has mostly recovered from supply shortages. Consumers have generally been able to keep a lid on auto loan balances, with increases in average balances being smaller in 2023 compared to 2022.

Student Loan Debt Flat in 2023; Now Payments and Debt Cancellations Resume

Federal student loan repayments and interest remained paused throughout 2023. However, student loan balances have already declined by more than $120 billion since early 2020 due to loan cancellation programs and borrowers continuing to pay down their debt.

Gen Xers Carry Significantly Larger Average Credit Card Balances

Generation X consumers, who are in their mid-40s to mid-50s, have average credit card balances of $9,123, which is 40% greater than the national average of $6,501. These consumers are likely to have multiple monthly payments to service, including student loans, mortgages, credit cards, and car payments.

Personal Loan Debt up; Some Borrowers Continue to Pivot to Fixed-Rate Loans

Both unsecured and secured personal loans grew at double-digit rates in 2023 as debt consolidation became a primary factor for consumers looking to escape increasing variable-rate credit balances. Average personal loan debt increased across all generations.

Consumer Debt in 2024: Credit Card, Auto Loans in Focus

Rising interest rates on variable-rate credit cards were a constant concern in 2023. Despite some tightening among lenders, an abrupt halt to extending new credit to consumers hasn’t materialized. Average wages continue to outpace inflation, and unemployment remains below 4% nationwide, providing some relief to consumers.

For more detailed insights, keep an eye out for Experian reports on individual types of consumer debt over the next few months.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to help you navigate your mortgage options with expertise and care.

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