Debt is expanding but off previous peaks

February 13, 2025

Household debt rose 0.5% quarter-over-quarter to a total of $18 trillion in the fourth quarter of 2024, according to the Federal Reserve Bank of New York’s Household Debt and Credit report. That is the smallest gain in a year and a half.

Delinquencies of any duration inched up to 3.59% of total balances from 3.54% in the third quarter. That is the largest share since before the pandemic. The share has been on an upward trend for two years. It is still below the 2010s average of 6.8%.

Mortgage balances edged higher by only $11 billion or 0.09%; that is a slowdown from previous quarters. Americans on both ends of the credit score spectrum took out mortgages: Originations increased for those with credit scores less than 620 and 760 or above.

New mortgage delinquencies were essentially flat at 3.6%. Serious delinquencies (90 days or more) were also flat at 1.1%. Transitions into serious delinquencies hit those aged 70+ the hardest; those aged 18-29 reported a drop.

Demand for housing slowed in the last quarter of 2024 as mortgage rates increased again. By many metrics, affordability is at historical lows. However, the New York Fed found that first-time home buyers accounted for a growing share of home purchases; that runs counter to the belief that these buyers have given up. It points to continued resiliency of American consumers.

Credit card balances rose by $45 billion, or 3.9%. That is an acceleration compared to one year ago. Retail sales boomed in December as the holiday season was compressed into just one month, which concentrated credit card usage in December.

New, 30-day delinquencies on credit cards edged higher to 9% from 8.8% in the previous quarter. Serious delinquencies ticked up to 7.2% from 7.1%. These are both above the pre-pandemic averages but are still below the heights reached after the Financial Crisis in 2008-2009. Transitions into serious delinquencies increased for all age groups except for those aged 30-39.

Auto debt rose 0.7% on an increase of $11 billion. That marks a slowdown from the third quarter. New delinquencies as a share of current balances ticked down in the fourth quarter; but the share of new, seriously delinquent loans edged up. Like credit card loans, new, seriously delinquent auto loans have breached pre-pandemic average levels but are still below the 2009 peak. Younger age groups transitioned into serious delinquency; those aged 60 and above saw their share tick down.

The New York Fed found that new delinquencies on auto loans increased the most for the lowest-income consumers; they decreased for the highest-income. High auto prices and interest rates are resulting in higher monthly payments, stressing those on the lower side of the income spectrum the most.

A survey by the New York Fed conducted in October found that the average rejection rates for different types of loans increased across the board last year and surpassed the pre-pandemic benchmark. The rates for auto loans and mortgage refinancings reached the highest since the series began 12 years ago.

More consumers tapped home equity lines of credit (HELOCs). The balance grew by $9 billion, marking the eleventh quarterly gain in a row. HELOCs remain below pre-pandemic levels; they are a way for homeowners, especially those with a low mortgage rate, to access record levels of home equity.

Student loan balances increased by $9 billion in the fourth quarter; both new 30-day and 90-day delinquencies declined. Though the pause on penalties for delinquent student loan payments lapsed in October, income-driven repayment plans are helping to soften the blow.

Foreclosures and bankruptcies fell again in the most recent quarter. Both remain well below pre-pandemic levels.