US household debt rises to $19.1 trillion in Q3, delinquencies edge higher: New York Fed

The overall level of troubled borrowing in the US economy increased modestly in the third quarter, although the latest figures do not point to a significant deterioration in credit quality, according to a report released by the Federal Reserve Bank of New York on Tuesday, Reuters reported.

Loans showing some form of distress accounted for 5% of total borrowing during the third quarter, up 0.3 percentage point from the previous quarter, the New York Fed said in its latest Quarterly Report on Household Debt and Credit.

Despite the increase, the share of troubled loans remained broadly in line with levels recorded before the COVID-19 pandemic and significantly below those seen during the global financial crisis nearly two decades ago.


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The report showed that transitions into early-stage delinquency increased for mortgages and auto loans. However, the movement into serious delinquency improved for credit card and student loan borrowers. Mortgage loans transitioning into serious delinquency also remained low by historical standards.

New York Fed researchers said some of the financial pressure on borrowers reflected lending trends that emerged during the pandemic, when credit standards were eased for certain categories, including credit cards.

Credit card delinquency rates increased sharply between 2022 and 2024, with borrowers in lower-income neighbourhoods experiencing the greatest pressure, according to a separate analysis by New York Fed economic research adviser Donghoon Lee, Reuters reported.

A growing share of new credit card accounts during the pandemic went to borrowers with lower incomes and weaker credit scores, and those accounts are now showing higher levels of financial distress. However, researchers expect new credit card delinquencies to show further improvement in the absence of broader economic shocks.

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US Household Debt Climbs $334 Billion
The report also highlighted continuing stress among student loan borrowers following the resumption of payments after the pandemic-era pause.

Student loans more than 90 days past due accounted for 10.9% of outstanding borrowing in the category during the third quarter, compared with 10.6% in the previous quarter.

Meanwhile, total US household debt increased 1.8%, or $334 billion, to $19.1 trillion in the third quarter from the preceding three-month period, Reuters reported.

Mortgage debt continued to account for the largest share of household borrowing, rising by $257 billion to $13.4 trillion, supported by an increase in new home-related borrowing.

Credit card balances also increased by $22 billion to $1.3 trillion during the quarter, while outstanding auto loan balances rose by $21 billion to $1.7 trillion.

The latest figures suggest that while overall household borrowing continues to expand and some categories of consumer credit remain under pressure, broader credit conditions have not yet shown signs of a significant deterioration.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)