Households borrowed more at the end of 2025

February 10, 2026

Nominal household debt rose 1% to a total of $18.8 trillion in the fourth quarter of 2025, according to the Federal Reserve Bank of New York’s Household Debt and Credit report. Borrowers aged 18-49 took on more debt while the elderly, above 70 years, reduced their debt.

Delinquencies of any duration increased to 4.8% of outstanding debt, up from 3.6% a year ago. That is the highest rate since the third quarter of 2017. Consumer balance sheets deteriorated in 2025, especially among low-income borrowers.

Mortgage balances ticked higher by 0.8%, the lowest quarterly gain of the year. Both new mortgage delinquencies (3.9% vs. 3.6%) and transitions into serious delinquency (90+ days of non-payment) increased compared to the previous quarter.

The rise in mortgage delinquencies is not evenly distributed across the US. Borrowers in the lowest income quartile have reported the sharpest increase; high income borrowers posted far fewer delinquencies. That is according to an accompanying blog by the Federal Reserve Bank of New York.

Mortgage delinquencies are rising in regions where labor and housing markets are worsening. Any increase in the unemployment rate raises the risk of mortgage delinquencies.

Seriously delinquent (90 days or more) student loans remained elevated at 9.6%, compared to 9.4% the previous quarter. They were 0.5% a year ago before the end of the pandemic-era moratorium on student loan repayments.

Student loan transitions into serious delinquency reached a new record high in the fourth quarter at 16.2%. That is up from 14.3% during the third quarter, 12.9% in the second, 8% in the first and 0.7% a year ago. This means more borrowers are not making payments on their student loans.

We expect more student loan delinquencies and defaults in the quarters ahead. The Department of Education recently announced it was delaying plans to garnish wages of defaulted student borrowers. In the meantime, credit scores are falling, which depresses demand for credit cards and housing.

Credit card debt expanded by 3.6% in the fourth quarter after rising 2% in the third. New, 30-day delinquencies on credit cards slipped to 8.7% from 8.8%; serious delinquencies ticked up to 12.7% from 12.4%. Serious delinquencies grew most among those aged 40-59.

Real personal disposable income fell from September to November, the last month of data we have. Consumers are dipping into savings to support consumption. This provides more evidence that higher income consumers are driving the economy, while younger and subprime borrowers are falling behind.

Auto debt rose 0.7% from a flat reading in the third quarter. New, 30-day delinquencies edged lower to 7.7% from 7.8% while seriously delinquent loans moved higher to 5.2% from 5% where they were for three straight quarters. New car loans increased the most among subprime borrowers with credit scores of less than 620.

Last week's Senior Loan Officer Opinion Survey (SLOOS) by the Federal Reserve found that banks left lending standards unchanged for most consumer loans. Auto loans were an exception; some eased standards.

Home equity lines of credit (HELOC) balances increased by $12 billion. That marks the fifteenth straight quarter of gains. New HELOC delinquencies were flat at 2.2% while new serious delinquencies edged lower to 1.2% from 1.3%.

Foreclosures edged higher even as bankruptcies fell in the fourth quarter. Both remain below pre-pandemic averages.