American household debt climbed to $18.59 trillion in the third quarter of 2025, marking a $197 billion increase from the previous quarter, according to a report released Tuesday by the Federal Reserve Bank of New York.
The 1% quarterly increase brought total household debt up $642 billion year-over-year, with mortgage debt driving much of the growth as housing market resilience continues despite elevated interest rates.
Mortgage balances expanded by $137 billion during the third quarter to reach $13.07 trillion, is the largest contribution to overall debt growth. The pace of mortgage originations increased to $512 billion in newly originated mortgages during Q3 2025, up from $458 billion in the second quarter—an 11.8% quarterly increase.
Home equity line of credit (HELOC) balances rose by $11 billion to $422 billion, continuing growth that began in 2022. Aggregate HELOC limits increased by $8 billion during the quarter, while credit card limits climbed by $94 billion—a 1.8% increase—reflecting continued lender confidence despite rising delinquencies.
Outstanding student loan debt stood at $1.65 trillion in Q3 2025, with 9.4% of aggregate student debt reported as 90 days or more delinquent or in default.
More significantly, the transition rate into serious delinquency for student loans surged to 14.26% in the third quarter, compared to just 0.77% during the same period in 2024. This is the fastest transition rate into serious delinquency since data collection began in 2000.
The spike follows the resumption of federal student loan collections in April 2025, after a one-year “on-ramp” period that ended forbearance protections implemented during the pandemic.
Credit card balances rose by $24 billion from the previous quarter to reach $1.23 trillion—an all-time high and 5.75% above levels from a year ago. Despite the record balances, credit card delinquency rates showed relative stability, with early delinquencies rising modestly to 8.8% from 8.6% in the prior quarter.
Transitions into serious credit card delinquency (90+ days past due) stood at 7.05% in Q3 2025, nearly unchanged from 7.10% a year earlier. However, these rates remain elevated compared to pre-pandemic levels when the average credit card delinquency rate was 6.2%.
Auto loan balances held steady at $1.66 trillion during the quarter, with $184 billion in new auto loans and leases appearing on credit reports—a slight decrease from $188 billion in Q2 2025. Auto loan delinquency rates showed modest improvement, with new 30-day delinquencies falling to 7.8% from 8%, though serious delinquencies remained at 5%.
Other balances, including retail cards and consumer finance loans, rose by $10 billion to $550 billion.
Aggregate delinquency rates remained elevated in Q3 2025, with 4.5% of outstanding debt in some stage of delinquency—the highest level since the first quarter of 2020. This is an increase from 4.4% in the second quarter.
While transitions into early delinquency were mixed across debt types, transitions into serious delinquency mostly increased, with the notable exception of mortgages, which saw a slight decrease. The transition rate for mortgages into serious delinquency was 1.28%, up from 1.08% a year earlier but showing improvement from the previous quarter.
Foreclosure activity also edged higher during the quarter. The New York Fed reported that 55,000 individuals had new foreclosure notations on their credit reports in Q3 2025, an increase from the previous quarter. Separate data from ATTOM showed that 101,513 properties had foreclosure filings during the third quarter, up 17% from a year earlier, though still within historically reasonable ranges.
The debt increase comes as the Federal Reserve has begun cutting interest rates to support a softening labor market. In September 2025, the Fed reduced its benchmark rate by a quarter point to 4.0%-4.25%, followed by another quarter-point cut in October to 3.75%-4.0%.
