Household Debt Strains Deepen as Mortgage and Student Loan Delinquencies Climb

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A Federal Reserve report shows credit stress rising unevenly across U.S. households, with lower-income borrowers and student loan holders facing the sharpest pressures. Mortgage delinquency rates remain relatively healthy by long-term standards but are beginning to rise after having fallen to unusually low levels during the COVID-19 pandemic. However, mortgage stress is accelerating in specific segments of the country, particularly in lower-income areas and in areas experiencing worsening labor markets or housing market conditions.

Why it matters

The findings underscore a widening divide in household financial conditions, even as the broader U.S. economy continues to perform relatively well. Lower-income households are increasingly struggling amid a slowing labor market and persistently high living costs, while higher-income households remain financially resilient and continue to support overall economic growth through spending.

The details

Overall, 4.8 percent of household loans were delinquent in some form during the fourth quarter, up from 4.5 percent in the third quarter. Student loans remain the most troubled segment of the household credit market, with 9.6 percent of student loans at least three months delinquent. The flow of student loans into serious delinquency surged to 16.2 percent in the fourth quarter, compared with just 0.7 percent in the final quarter of 2024.

• In the fourth quarter of 2025, the share of mortgages transitioning into serious delinquency rose to 1.4 percent, up from 1.09 percent in the final three months of 2024.
• Across all forms of household borrowing, the transition rate into serious delinquency reached 3.3 percent in the fourth quarter, compared with 1.7 percent in the prior quarter.