In 2021, consumers had record amounts of debt. This led to a year when interest rates will likely rise significantly.

According to Tuesday’s data from the Federal Reserve New York District, the total debt reached $15.6 trillion at the close of the year. This is an increase of $333 Billion in the fourth quarter, and just under $1 trillion overall.

It was the most significant quarterly gain since 2007 and was the record-breaking annual increase, dating back to 2003.

They came before the end of an era in which the Fed is expected to start jacking up interest ratesIt aims to slow down the inflation rate, which is at its highest point in almost 40 years. Markets anticipate the central bank will be proactive. start hiking rates in Marchto adopt at least five increases totaling 1.25 percentage point.

Fed moves interest are directly tied to the prime rateConsumers pay for many types of debt including credit cards, adjustable-rate mortgages and other forms.

Mortgages accounted for a large portion of the increase in debt. Balances rose by nearly $890 billion over the past year, and 258 billion during the fourth quarter. This brings the total to $11 trillion. The year’s mortgage originations surpassed $4.5 trillion. This is a record.

The credit card balances rose $52 billion over the past three months, setting a record quarterly total of $860 billion.

The responsibility to rapid gain in pricesThe auto loan balances increased 6.6% or $90 billion to $1.46 trillion, according to the report. According to, new auto prices increased 11.8% in the past year. However, used cars rose by 37.3%. Labor Department data.

Student loans saw little growth, with only $20 billion more for the year. In fact, they actually decreased marginally during the fourth quarter. Even though most forbearance programs have expired, these programs still manage to keep delinquencies and balances under control.

New York Fed researchers noticed that rising rates could have an impact on household cash flow as borrowers adjust. In this instance, people who have locked in low rates on mortgages are unlikely to move out to purchase new properties as they see rates rising. However, credit card holders could feel constrained by increasing financing costs.