Household Debt Increased $185 Billion in Q2; Delinquencies Elevated

by Calculated Risk on 8/05/2025 11:13:00 AM

From the NY Fed: Household Debt Growth Remains Steady; Auto Loan Originations Pick Up

The Federal Reserve Bank of New York’s Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit. The report shows total household debt increased by $185 billion (1%) in Q2 2025, to $18.39 trillion. The report is based on data from the New York Fed’s nationally representative Consumer Credit Panel. It includes a one-page summary of key takeaways and their supporting data points.

The New York Fed also issued an accompanying Liberty Street Economics blog post analyzing borrower trends in the mortgage market across balances, delinquency rates, credit scores, and geography.

“This quarter’s flow of household debt into serious delinquency was mixed across debt types, with credit card and auto loans holding steady, student loans continuing to rise, and mortgages edging up slightly,” said Joelle Scally, Economic Policy Advisor at the New York Fed. “Despite the recent uptick in mortgage delinquency, overall mortgage performance remains strong by historical standards.”

Mortgage balances grew by $131 billion in the second quarter and totaled $12.94 trillion at the end of June 2025. Credit card balances rose by $27 billion from the previous quarter and stood at $1.21 trillion. Auto loan balances also increased by $13 billion and totaled $1.66 trillion. HELOC balances rose by $9 billion to $411 billion, representing the thirteenth consecutive quarterly increase. Student loan balances edged up by $7 billion and stood at $1.64 trillion. In total, non-housing balances rose by $45 billion, a 0.9% increase from Q1 2025.

The pace of mortgage originations increased slightly, with $458 billion newly originated mortgages in Q2 2025. There were $188 billion in new auto loans and leases appearing on credit reports during the second quarter, an increase from the $166 billion observed in the first quarter of 2025. Aggregate limits on credit card accounts continued to rise by $78 billion, representing a 1.5% increase from the previous quarter.

Aggregate delinquency rates remained elevated in the second quarter, with 4.4% of outstanding debt in some stage of delinquency. Transition into early delinquency held steady for nearly all debt types except for student loans. Student loans saw another uptick in the rate at which balances went from current to delinquent due to the resumption of reporting of delinquent student loans. Transitions into serious delinquency were mixed across debt types: auto loans and credit card debt were largely stable, mortgages and HELOCs edged up slightly, and student loans rose sharply.
emphasis added

Click on graph for larger image.

Here are two graphs from the report:

The first graph shows household debt increased in Q2.  Household debt previously peaked in 2008 and bottomed in Q3 2013. Unlike following the great recession, there wasn’t a decline in debt during the pandemic.

From the NY Fed:

Aggregate nominal household debt balances increased by $185 billion in the second quarter of 2025, a 1% rise from 2025Q1.
Balances now stand at $18.39 trillion and have increased by $4.24 trillion since the end of 2019, just before the pandemic recession.

The second graph shows the percent of debt in delinquency.

The overall delinquency rate increased in Q1.  From the NY Fed:

Aggregate delinquency rates remained elevated in the second quarter of 2025. As of the end of June, 4.4% of outstanding
debt was in some stage of delinquency, which is 0.1 percentage point higher than the first quarter. Transition into early delinquency
held steady for nearly all debt types; the exception was for student loans, which saw another uptick in the rate at which balances went
from current to delinquent due to the resumption of reporting of delinquent student loans on credit reports after a nearly 5-year pause
due to the pandemic. Transition rates into serious delinquency, defined as 90 or more days past due, were largely stable for auto loans
and credit cards; edged up slightly for mortgages and HELOCs; and rose sharply for student loans.

There is much more in the report.