Based on the latest data on U.S. household debt through Q1 2025, several key observations can be made:
Overall Household Debt Trends
- Total household debt reached a record $18.2 trillion in Q1 2025, marking a 0.9% increase from Q4 2024 and a 2.9% rise year-over-year. This is the highest nominal level on record, although when adjusted for inflation, it is slightly below the peak seen around 2009
- The growth rate of household debt has slowed compared to previous years, with the annual increase being the lowest since Q1 2021
Composition of Household Debt
- Mortgage debt is the largest component, totaling $12.8 trillion and accounting for about 70% of total household debt. Mortgage balances increased by $199 billion in Q1 2025, continuing steady growth
- Student loan debt stands at $1.63 trillion, up $16 billion in the quarter and $36 billion year-over-year, reaching an all-time high nominally. However, recent federal student loan forgiveness programs have caused some fluctuations in prior years
- Credit card debt declined by $29 billion in Q1 2025 to $1.18 trillion, showing consumers are paying down revolving credit balances despite rising delinquency rates
- Auto loan debt also decreased by $13 billion to $1.64 trillion, marking only the second quarterly decline since 2011, though it remains a significant portion of debt
- Home equity lines of credit (HELOCs) have increased for 12 consecutive quarters, reaching $402 billion
Delinquency and Credit Risk
- While total debt is rising, serious delinquency rates (90+ days past due) have increased notably, especially for student loans, which saw delinquency rates jump from 0.8% in Q1 2024 to 8.04% in Q1 2025 as past due reporting resumed post-pandemic.
- Credit card delinquency rates also rose slightly from 6.86% to 7.04%, and auto loan delinquency rates remain elevated
- Mortgage and HELOC delinquency rates have increased but remain lower than other categories, with mortgage delinquency rising from 0.92% to 1.22%
Consumer Behavior and Economic Implications
- The reduction in credit card and auto loan balances suggests some consumers are prioritizing paying down high-interest revolving debt.
- The rise in mortgage and student loan debt indicates continued borrowing tied to housing and education, which are major long-term financial commitments.
- The increase in delinquency rates, particularly for student loans, may negatively impact credit scores and future borrowing capacity for affected households
In summary, U.S. household debt is at record nominal levels with mortgages dominating the debt landscape. Although some revolving debts like credit cards and auto loans have decreased recently, delinquency rates are rising, signaling growing financial stress for certain borrowers, especially those with student loans. The overall slower growth in debt suggests cautious borrowing amid economic uncertainties
