US household debt continued its upward trajectory in the final quarter of 2025, reaching a total of $18.8 trillion, a $191 billion, or 1.0%, increase from the previous quarter, according to a report released by the Federal Reserve Bank of New York. While the pace of growth remains modest, rising delinquencies across several debt categories are raising concerns about the financial health of American consumers.
Debt Composition and Growth
Mortgage balances led the increase, growing by $98 billion to $13.17 trillion by the end of . Credit card debt also saw a significant rise, increasing by $44 billion to $1.28 trillion. Auto loan balances edged up by $12 billion to $1.67 trillion, a slowdown from the previous quarter’s stability. Home equity lines of credit (HELOCs) increased by $11.6 billion to $434 billion, and student loan balances rose by $11 billion to $1.66 trillion.
Non-housing debt increased by $81 billion, representing a 1.6% increase from the third quarter of 2025. Aggregate credit limits on credit cards continued to climb, increasing by $95 billion, while HELOC limits rose by $25 billion.
Delinquency Rates Show Mixed Signals
The report highlights a mixed picture regarding delinquency rates. Transitions into early delinquency were varied, with mortgages and student loans experiencing increases, while other debt types remained stable. However, transitions into serious delinquency ticked up for credit card balances, mortgages, and student loans, while auto loans and HELOCs saw slight decreases.
Wilbert van der Klaauw, Economic Research Advisor at the New York Fed, noted that while mortgage delinquency rates are near historically normal levels, the deterioration is “concentrated in lower-income areas and in areas with declining home prices.” This geographic concentration is a key concern, suggesting that economic hardship is not evenly distributed across the country.
Mortgage Market Activity
The pace of mortgage originations increased in the fourth quarter, with $524 billion in newly originated mortgages. However, new auto loan originations experienced a small dip, falling from $184 billion in the third quarter to $181 billion in the fourth.
Broader Economic Context
The increase in household debt comes at a time of ongoing economic uncertainty. While the labor market has remained relatively strong, there are growing concerns about a potential slowdown. Rising interest rates, intended to curb inflation, are also increasing the cost of borrowing, making it more difficult for households to manage their debt obligations.
The rise in credit card debt is particularly noteworthy, as it often indicates that consumers are relying on credit to cover everyday expenses. This can be a sign of financial stress, especially for lower-income households. The increasing delinquencies in this category further support this concern.
Regional Disparities and Vulnerabilities
The concentration of mortgage delinquencies in lower-income areas and regions with declining home prices points to a potential vulnerability in the housing market. Areas that experienced rapid home price appreciation during the pandemic may be particularly susceptible to a correction, which could lead to further increases in delinquencies.
The report doesn’t explicitly detail the areas experiencing the most significant increases in mortgage delinquencies, but Liberty Street Economics, an accompanying blog post from the New York Fed, examines the interaction between recent mortgage delinquency rates and geographic variation in economic conditions, suggesting a deeper dive into regional data is warranted.
Credit Card Spending and Limits
The continued rise in credit card balances, coupled with increasing credit limits, suggests a willingness among lenders to extend credit, even as economic conditions become more uncertain. However, this also raises concerns about the potential for over-indebtedness, particularly if consumers are unable to keep up with their payments.
According to Investopedia, comparing your credit card bill to the US average can help determine if you are paying more than most. The average credit card debt per borrower is a key indicator of consumer financial health.
Looking Ahead
The latest data from the New York Fed paints a complex picture of household finances. While overall debt levels are growing at a moderate pace, rising delinquencies and regional disparities suggest that a significant number of households are struggling to manage their debt obligations. Continued monitoring of these trends will be crucial in assessing the overall health of the US economy.
The interplay between rising debt levels, increasing delinquencies, and potential economic headwinds will likely be a key focus for policymakers and financial institutions in the coming months. The concentration of risk in lower-income areas and regions with declining home prices underscores the need for targeted support and intervention to prevent a broader financial crisis.
