Despite concerns of a K-shaped economy, household balance sheets are solid, says one market analyst.
Americans’ household debt levels, ranging from credit card balances to auto loans, reached a new record high last quarter.
Total household debt in the United States surged by $197 billion in the third quarter to $18.59 trillion, according to the New York Federal Reserve.
Despite the latest Household Debt and Credit Report highlighting an ocean of red ink among consumers, conditions are moderating, according to Donghoon Lee, Economic Research Advisor at the New York Fed.
“Household debt balances are growing at a moderate pace, with delinquency rates stabilizing,” he said in the report. “The relatively low mortgage delinquency rates reflect the housing market’s resilience, driven by ample home equity and tight underwriting standards.”
Mortgage balances increased by $137 billion to $13.07 trillion during the third quarter—up by $478 billion from a year ago. Additionally, the pace of mortgage originations climbed to $512 billion for the quarter.
The rate of serious mortgage debt delinquency—90 days or more delinquent—edged up to 1.28 percent from 1.08 percent in the third quarter of 2024.
Credit card balances jumped by $24 billion to $1.23 trillion, while serious delinquency rates declined to 7.05 percent from 7.1 percent.
Total auto loan debt held steady at $1.66 trillion. Delinquencies rose by about 0.1 percent.
While the figures might seem concerning at first glance, they are better than they appear, Ted Rossman, senior industry analyst at Bankrate, said.
“It’s worth pointing out that we would expect these numbers to grow over time as the population grows and the economy expands,” Rossman said in a statement to The Epoch Times. “The household debt-to-income ratio is lower now than it was from the late 1990s to the late 2010s. It has risen over the past five years, but not in a particularly worrisome fashion.”
Student loan balances, meanwhile, swelled by $15 billion to $1.65 trillion.
With the current administration resuming student loan collections, borrowers may be having a challenging time finding the money to repay the loans, most of which are backed by the U.S. government.
During the July-to-September period, the student loan serious delinquency transition rate increased to an all-time high of 14.3 percent, describing new accounts flowing into serious delinquency, up dramatically from 0.77 percent in the third quarter of 2024, a period that saw the expiration of COVID-19 pandemic-era forbearance.
Previously unreported missed payments on federal student loans from the second quarter of 2020 to the fourth quarter of 2024 are now being reflected in borrowers’ credit files, the regional central bank stated. This shift has sustained elevated delinquency levels after a notable surge earlier in 2025.
“Student loan delinquencies are at a record high, but auto loan and credit card delinquencies aren’t as high as they were in the middle of 2024,” Rossman added.
By Andrew Moran
