Part 3/6:
Mortgage debt now exceeds $122 trillion, indicating sustained activity in the housing market but also signaling potential vulnerability if rates continue to rise.
Auto loans have reached a record $16 trillion, further fueling consumer spending, especially on durable goods.
However, not all debt is created equal. The most concerning type is variable-rate debt, like credit cards, which directly responds to interest rate increases.
The Impact of Rising Interest Rates
The Federal Reserve's rate hikes have a direct and escalating impact on consumers holding variable-rate debt. As interest rates climb:
Credit card rates have hit an all-time high of approximately 25%.
Average auto loan interest has risen to 10%.