American households’ debt burdens increased to the highest level on record in the third quarter of 2025, according to a new report by the Federal Reserve Bank of New York.
The New York Fed’s Center for Microeconomic Data released its quarterly report on household debt and credit this week, which showed that household debt rose by $197 billion in the third quarter to a record of $18.59 trillion.
Mortgage balances grew by $137 billion in the quarter to a total of $13.07 trillion at the end of September, while credit card balances rose $24 billion to a total of $1.23 trillion at the end of the quarter. Auto loan balances were steady at $1.66 trillion, while student loan balances increased $15 billion to a total of $1.65 trillion.
“Household debt balances are growing at a moderate pace, with delinquency rates stabilizing,” said Donghoon Lee, economic research advisor at the New York Fed. “The relatively low mortgage delinquency rates reflect the housing market’s resilience, driven by ample home equity and tight underwriting standards.”
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Overall delinquency rates remained elevated in the third quarter of 2025, with 4.5% of outstanding debt in some stage of delinquency.
The New York Fed noted that transitions into early delinquency were mixed with credit card debt and student loans increasing, while all other debt types saw decreases.
Transitions into serious delinquencies, defined as 90 days or more delinquent, were largely stable for auto loans, credit cards and mortgages. Overall debt flow into serious delinquency was 3.03% in the third quarter of 2025, up from 1.68% in the same quarter last year.
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Missed payments on federal student loans weren’t reported to credit bureaus from the second quarter of 2020 to the four quarter of 2024, and the resumption of those reports caused student delinquencies to rise sharply in the first half of 2025.
The New York Fed found that in the third quarter of 2025, 9.4% of aggregate student debt was reported as 90+ days delinquent or in default, compared with 7.8% in the first quarter and 10.2% in the second quarter.
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The Federal Reserve cut interest rates for the second consecutive meeting in October despite elevated inflation amid signs of a weakening labor market.
Policymakers have cautioned that while economic growth has been solid overall, there are signs it’s being driven by higher income consumers while less affluent households are struggling.
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Federal Reserve Chairman Jerome Powell said at his press conference following the rate cut decision that there is a “bifurcated economy” and that “consumers at the lower end are struggling and buying less and shifting to lower-cost products, but that at the top, people are spending at the higher end of income and wealth.”
Reuters contributed to this report.
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