Latest news with #consumer debt
Yahoo
05-08-2025
- Business
- Yahoo
Record Surge in Past-Due Student Loans Adds to US Debt Burden
(Bloomberg) -- The share of US consumer debt in serious delinquency rose in the second quarter to the highest level since early 2020, reflecting a record surge in past-due student-loan debt. PATH Train Service Resumes After Fire at Jersey City Station Mayor Asked to Explain $1.4 Billion of Wasted Johannesburg Funds Chicago Curbs Hiring, Travel to Tackle $1 Billion Budget Hole All Hail the Humble Speed Hump Shop Top Mortgage Rates Personalized rates in minutes A quicker path to financial freedom Your Path to Homeownership Some 3% of debt was at least 90 days delinquent in the April-to-June period, up from 2.8% in the first three months of the year, the Federal Reserve Bank of New York said Tuesday in its Quarterly Report on Household Debt and Credit. The share of student-loan debt entering serious delinquency was 12.9%, the highest in 21 years of data. The rise in delinquencies suggests American households are facing increasing financial distress this year amid high interest rates and a slowdown in hiring. Recent data showed consumer spending fell in the first six months of 2025, even before tariffs started to boost prices. 'This quarter's flow of household debt into serious delinquency was mixed across debt types, with credit card and auto loans holding steady, student loans continuing to rise and mortgages edging up slightly,' Joelle Scally, an economic policy adviser at the New York Fed, said in a press release. Overall household debt increased by $185 billion in the second quarter to $18.4 trillion, according to the report, bringing aggregate debt balances 30% higher than where they were before the pandemic. For comparison, US gross domestic product has risen 38% over the same period. Alongside the surge in seriously delinquent student loans, transitions into serious delinquency for mortgages and home equity lines of credit rose slightly, while holding steady for auto loans and declining for credit-card debt. Student loan delinquencies have been on the rise since the beginning of the year, after the government ended a years-long payment freeze. Still, the share of such debt at least 90 days past due, at 10.2%, remained a bit below pre-pandemic levels in the second quarter of 2025, according to the report. In a briefing with reporters, New York Fed researchers said student-loan delinquencies would likely continue to rise, eventually returning to pre-pandemic levels. Between late 2012 and early 2020, the share of student debt that was seriously delinquent ranged between 10.7% and 11.8%. Close Attention Fed officials are paying close attention to the state of the consumer as they hold interest rates steady. On Wednesday, Fed Chair Jerome Powell told reporters delinquency rates 'are not a problem,' adding that 'essentially, you have a consumer that's in good shape and is spending,' though 'not at a rapid rate.' Recent data from other sources indicate middle- and upper-income households are increasingly falling behind on credit-card and auto-loan payments. That trend raises the stakes for an economy that has come to rely more and more on consumer spending from top earners to power continued expansion. Delinquency rates for mortgages, which comprise the largest share of household debt, have 'risen modestly' but remain near historically low levels, according to the report. The biggest increase in delinquency rates has been for loans insured by the Federal Housing Administration, or FHA loans, which typically include more first-time buyers and lower-income borrowers. A tightening of lending standards since the Global Financial Crisis has led to an improvement in the credit quality of mortgage borrowers, but risks could rise as the housing market slows after a post-pandemic surge in home prices, the New York Fed researchers said. 'While home prices have only declined slightly, there is some risk that a continued decline in home prices may add pressure should more borrowers find themselves underwater,' they wrote in a blog post published Tuesday alongside the report. Russia's Secret War and the Plot to Kill a German CEO AI Flight Pricing Can Push Travelers to the Limit of Their Ability to Pay Government Steps Up Campaign Against Business School Diversity What Happens to AI Startups When Their Founders Jump Ship for Big Tech How Podcast-Obsessed Tech Investors Made a New Media Industry ©2025 Bloomberg L.P. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Bloomberg
05-08-2025
- Business
- Bloomberg
Record Surge in Past-Due Student Loans Adds to US Debt Burden
The share of US consumer debt in serious delinquency rose in the second quarter to the highest level since early 2020, reflecting a record surge in past-due student-loan debt. Some 3% of debt was at least 90 days delinquent in the April-to-June period, up from 2.8% in the first three months of the year, the Federal Reserve Bank of New York said Tuesday in its Quarterly Report on Household Debt and Credit. The share of student-loan debt entering serious delinquency was 12.9%, the highest in 21 years of data.
