14.5% of borrowers use personal loans for everyday expenses as everyday costs grow.
The personal loan market is growing, in part due to the high cost of living. About 14.5% of borrowers use personal loans for everyday expenses, a MarketWatch Guides survey found. The two more common reasons consumers use personal loans are debt consolidation and home improvements. Nearly 21.2% of personal loans are used to consolidate debt and 20.1% are used to make home improvements.
At the end of last year, most consumer debts rose substantially. The Q4 household debt report released by the Federal Reserve Bank of New York found that mortgage debt rose by $112 billion while home equity lines of credit increased by $11 billion. Credit card balances now stand at $1.13 trillion after increasing by $50 billion in Q4. Auto loan balances also increased into the trillions to $1.61 trillion.
Certain states are facing a cost of living crisis, with many residents spending most of their income just on housing and utilities. Half the residents of New York City lack the income to meet the basic cost of living, according to a United Way of New York report. In 2021, just 36% of households struggled to deal with the cost of living. Of those struggling, 79% of families spent more than 30% of their income on housing alone.
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