Debts owed by consumers reached an all-time peak in the second quarter of the year
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In Q2 2025, total U.S. household debt surged to a new record of $18.39 trillion, according to a report based on data from the New York Fed's Consumer Credit Panel. The increase was primarily driven by a $131 billion rise in mortgage balances, which reached $12.94 trillion, and a $27 billion increase in total credit card balances, bringing them to $1.21 trillion.
Despite stable housing activity, mortgage delinquencies inched up to 1.29%, while credit card and auto debt delinquencies remained largely steady at 6.93% and 2.93%, respectively. However, student loan delinquencies surged sharply as the pause on missed payments ended, reaching around 12.9%.
The report also highlighted a rise in home equity lines of credit (HELOCs), with total HELOCs reaching $411 billion in Q2 2025, marking the thirteenth consecutive quarterly increase. HELOC delinquencies also rose to 1.15%.
Mortgage originations increased slightly, reaching $458 billion in Q2 2025, while auto loan originations rose to $188 billion from $166 billion in Q1. Interestingly, one source notes a slight $1 billion overall decline in auto loan debt, possibly due to differing measurement approaches.
Non-housing debt overall rose by $45 billion in Q2 2025. Credit card limits increased by $78 billion, reflecting continued lender optimism.
Joelle Scally, a research officer at the Fed, noted that the second quarter's flow of household debt into serious delinquency was mixed across debt types. She cited a sharp rise in serious delinquency rates for student loans, which climbed to 12.88%.
Home sales in recent months have slowed, but the homes that sold were more expensive. Despite this, the housing market seems to have provided some stability to the overall debt picture, given the increase in mortgage balances.
Inflationary pressures, partly due to tariffs, may have indirectly contributed to the debt increase by increasing living costs and reducing disposable income, pushing households to rely more on credit.
Overall, the report offers a detailed snapshot of consumer borrowing behaviors, including shifts in delinquency rates and credit originations. The mixed picture of delinquency rates and the record-high household debt suggest underlying financial stress in U.S. households, but also indicate continued lender optimism.
[1] Fed Report: Q2 2025 Household Debt and Delinquency Trends [2] Wall Street Journal: Inflation pressures mount as tariffs rise [3] CNBC: Student loan delinquencies surge as payment pause ends [4] Bloomberg: Mortgage growth drives Q2 2025 household debt increase
- "Managing personal-finance becomes crucial as debt-management is essential to avoid the growing burden of household debt, with student loan delinquencies surging and overall debt reaching a record $18.39 trillion in Q2 2025."
- "The rise in credit card limits to $4.19 trillion in Q2 2025, coupled with increased credit card balances, might indicate a need for better personal-finance strategies to manage debt effectively and avoid excessive borrowing."
