The Fed’s report documented the financial squeeze that creditors, especially low-income consumers, were experiencing in recent years, due to rent, auto and credit card payments.
More than half of low-income (57%) and moderate-income (53%) consumers were rent-burdened in 2021, meaning that they were directing more than 30% of their household’s monthly income to rent. By contrast, 47% of middle-income and 44% of high-income households are rent-burdened, the report said.
About a quarter (24%) of mortgages in low-income communities were refinanced, a smaller share than 42% of mortgages that were refinanced in high-income areas during a period of low interest rates between 2020 and 2021, per the report. That meant fewer low-income borrowers benefited “from reduced rates and monthly costs,” the report said.
