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Written by Michael S. Darby
(Reuters) – Low-income Americans are starting to face early signs of economic disruption now that government aid programs related to the coronavirus pandemic have ended, but so far the problem has remained relatively contained. ing.
The New York Fed said in a report Thursday that “early delinquencies” on auto and credit card loans among low-income households began to increase in 2022 and are now higher than before the pandemic began in spring 2020. .
The report said that while “financial stress appears to be increasing” for low-income households, there has been no increase in hardship compared to the very low levels of financial hardship seen before the pandemic. It pointed out.
The report finds that even high-income Americans have faced difficulty obtaining mortgages, auto loans, and credit cards since 2021, with all measures at or slightly above pre-pandemic levels. did. However, the researchers added that “low-income areas have higher delinquency rates than high-income areas.”
The report finds that low-income Americans are caught between declining approval ratings and a more difficult economic environment.
“Now that the crisis phase of the pandemic has subsided, low-income households are facing a new economic reality. While fiscal and debt relief has helped restore household finances, inflation has eroded purchasing power,” the report said. It continues,” he said. This has a particularly serious impact on the housing sector, where more than half of low-income households rent rather than own their homes.
The report found that 44% of households in high-income areas were “rent burdened,” or spending more than 30% of their monthly income on rent, compared with 57% of low-income households. That’s what it means.
The report notes that despite the increase in delinquencies, low-income households are generally in better shape than they were before the pandemic, with median credit scores for these borrowers lower than they were in the last three months of 2019. He pointed out that the number rose from 651 in 2019 to 670 by 2019. The third quarter of last year.
The New York Fed report said student loan balances and repayments do not appear to be a major problem, given declining levels of education loans for low-income households and continued efforts toward debt forgiveness.
The report’s findings were drawn from data collected by the New York Fed as part of its Credit Market Issues Tracker, as well as other government data on income and geographic distribution. The bank said it defines low-income households as those living in a particular census tract and earning 80% of the area’s median income.
(Reporting by Michael S. Darby; Editing by Chizu Nomiyama)
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