Student loan delinquencies rose dramatically
of ConsumerAffairsAugust 6, 2025
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U.S. household debt increased by $185 billion in Q2 2025, reaching $18.39 trillion.
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Mortgage balances saw the largest quarterly growth, rising by $131 billion to $12.94 trillion.
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Serious delinquency rates rose sharply for student loans but remained stable for credit card and auto debt.
Total household debt in the U..S. reached a new high of $18.39 trillion in the second quarter of 2025, according to the Federal Reserve Bank of New Yorks Quarterly Report on Household Debt and Credit. The $185 billion (1%) increase from the previous quarter found growing balances across most debt categories, with mortgages continuing to drive the bulk of household liabilities.
The report, based on data from the New York Feds nationally representative Consumer Credit Panel, offers a detailed snapshot of consumer borrowing behaviors, including shifts in delinquency rates and credit originations.
Mortgage debt takes the lead
The largest contributor to the rising debt total was mortgage balances, which increased by $131 billion, bringing the total to $12.94 trillion. This growth accompanied a moderate uptick in mortgage originations, which reached $458 billion in Q2, up slightly from the previous quarter.
While home sales have slowed in recent months, the homes that sold were more expensive, leading to larger mortgages. Home Equity Lines of Credit (HELOCs) also saw a rise of $9 billion, marking their thirteenth consecutive quarterly increase and bringing the total to $411 billion.
Beyond housing, credit card balances grew by $27 billion, climbing to $1.21 trillion. Auto loans saw a similar trajectory, increasing by $13 billion to $1.66 trillion, while student loan balances edged up by $7 billion, totaling $1.64 trillion.
Non-housing debt overall rose by $45 billion, a 0.9% increase from the previous quarter. The availability of credit continued to expand, with credit card limits rising by $78 billion, or 1.5%, in the second quarter.
Delinquency trends were mixed
The report focused on varying trends in serious delinquency rates (90+ days past due), which climbed overall from 1.59% in the second quarter of 2024 to 2.91% in the second quarter of 2025. However, the picture varied across different debt types:
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Student loan delinquencies surged dramatically, with 12.88% of balances moving into serious delinquency, up from just 0.80% a year ago. This spike reflects the resumption of reporting previously unreported missed payments from Q2 2020 to Q4 2024.
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Mortgage delinquencies increased modestly to 1.29%, while HELOCs rose to 1.15%.
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Credit card and auto loan delinquencies remained largely steady at 6.93% and 2.93%, respectively.
According to Joelle Scally, economic policy advisor at the New York Fed, the second quarters 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. Despite the recent uptick in mortgage delinquency, overall mortgage performance remains strong by historical standards.
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