Business
The numbers on consumer debt have been somewhat skewed in the past two years. Home-based workers spend differently than employees commuting to work. Many remote workers with lower expenses used savings to pay off debt, causing a $40 billion reduction in total credit card debt in the U.S. For a brief period, we were going in the right direction. As we enter 2022, home prices have been skyrocketing, but interest rates have remained low, leading to increased home sales. Mortgage debt hit $17.6 trillion in 2021, by far the highest number of all types of debt. That escalation is expected to continue, even with projected interest rate hikes from the Federal Reserve Bank later this year.
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Credit-Hungry Lenders are Adjusting Their Strategies Increased home values create more equity for borrowers looking for secured home equity loans and HELOCs. That further drives down the numbers for personal unsecured loans and credit card debt, a boon for consumers, but a setback for lenders who are hungry for new customers. The trend has resulted in more programs to attract subprime borrowers. Auto loans, credit cards, and unsecured personal loans are easier to get now than they’ve been in years. It’s a simple matter of supply and demand. Cost-conscious Americans responded to the economic crisis of the pandemic by reducing their unsecured debt. Lenders want those numbers to go back
