Consumers dial back borrowing

May 12, 2026

Nominal household debt came in nearly flat, increasing just 0.1% to a total of $18.8 trillion in the first quarter of 2026, according to the Federal Reserve Bank of New York’s Household Debt and Credit report. That is up 32% from $14.2 trillion at the end of 2019, before the pandemic. 

After adjusting for inflation, the level of household debt actually contracted. Borrowers aged 18-39 in particular took on less debt; those 40 years or older increased their debt.

Delinquencies of any duration were unchanged at 4.8% of outstanding debt, up from 4.3% a year ago. That is tied with the previous quarter for the highest rate since 2017. Consumer balance sheets weakened in 2025, with low-income borrowers most affected.

Mortgage balances edged higher by 0.2%, the lowest quarterly gain since 2023. New mortgage delinquencies improved slightly by slipping lower to 3.8% in the first quarter. Serious delinquencies (90 days or more) increased 1.5%, the highest since 2018. 

Student loan balances in serious delinquency worsened to 10.3% from 9.6% at the end of 2025. They stood at 0.5% at the end of 2024, before the moratorium on student loan repayments ended. Student loans in serious delinquency fell to 10.9% from the previous quarter’s record high of 16.2%. That is the lowest reading in a year. 

Credit card debt contracted by 2% in the first quarter of 2026 after rising 3.6% in the fourth quarter of 2025. The number of credit cards fell less than 0.1%, indicating that the amount of debt being carried per account has fallen. Newly delinquent (30+ days) credit card balances slipped to 8.6% from 8.7%; serious delinquencies moved up to 13.1% from 12.7%, nearing levels not seen since the Great Financial Crisis. Serious delinquencies grew most among those aged 18-29, while borrowers 40-49 improved. 

Auto debt increased 1.1%, its largest increase since mid-2023. New delinquencies were flat at 7.7%, while seriously delinquent loans moved up to 5.6%. New car loans increased the most among prime borrowers with credit scores of 720 and above.

Home equity lines of credit (HELOC) balances increased by $12 billion. That marks the 16th straight quarter of gains. The category grew faster than other loan types. The number of new HELOC delinquencies edged lower, while serious delinquencies inched higher. Foreclosures and bankruptcies picked up. However, both remain below pre-pandemic averages. 

Real personal disposable income fell from February to March, the most recent data. The saving rate sits at its lowest point since October 2022. The “K-shaped” economy, in which high-income consumers drive most spending, is holding appearing in the borrowing data.

The most recent Senior Loan Officer Opinion Survey (SLOOS) by the Federal Reserve reported that lending standards were unchanged for auto and credit cards but modestly tighter for other types of consumer loans.