NEW YORK, Feb. 11, 2026 — U.S. household credit difficulties increased modestly in the fourth quarter of 2025 while remaining low compared with historical levels, according to the Federal Reserve Bank of New York. Total household debt reached $18.8 trillion, up $191 billion from the previous quarter, reflecting ongoing borrowing across mortgages, credit cards, and student loans. Mortgage delinquency rates edged higher compared with 2024 but remain low by long-term standards, rising from the unusually low levels seen during the pandemic.

Higher-income households continue to maintain relative financial stability, benefiting from asset gains and home equity, while lower-income Americans face mounting challenges. In regions where labor markets have weakened or housing costs have increased, mortgage delinquencies are climbing at a faster pace. Families with fewer financial cushions are adjusting spending and borrowing patterns, illustrating that economic conditions are experienced differently across income levels.

Student Loan Delinquencies Remain High

While student loans account for the largest share of troubled credit, mortgages still make up the bulk of total household debt, and trends in both are closely watched by lenders and policymakers.

Resumption of Repayments Drives Delinquencies: The report showed that 9.6 percent of student loans were at least three months delinquent, while the flow into serious delinquency reached 16.2 percent in the fourth quarter. The numbers reflect the resumption of repayments after extended pandemic-era forbearance programs. Many borrowers who paused payments for several years now face monthly obligations they struggle to meet, and the cumulative debt levels make it difficult to regain financial stability quickly.

Uneven Burden Across Income Levels: Lower-income borrowers are disproportionately affected, with slower wage growth and rising living costs limiting their ability to reduce debt. Those with higher incomes or significant assets can manage repayment more effectively, which highlights the uneven nature of the recovery. Economists said that student loan delinquencies remain a significant factor shaping financial stress and spending decisions for a substantial segment of the population.

Mortgage Defaults Mount in Vulnerable Areas

The fourth-quarter report showed that 1.4 percent of mortgages entered serious delinquency, up from 1.09 percent in the same period a year earlier. While still low compared with past recessions, the rise is most pronounced in lower-income neighborhoods and regions with weaker employment conditions. The pattern shows that localized economic stress can quickly affect households without substantial financial buffers, even as national data suggest overall stability.

Mortgages remain the largest portion of U.S. household debt, and lenders are monitoring serious payment problems closely for signs of risk. Analysts noted that even a modest increase in mortgage trouble can influence financial markets and underscore differences in how families manage debt under changing economic conditions.

Non-Mortgage Borrowing Adds Strain

Total household debt rose by $740 billion in 2025 and has grown by $4.6 trillion since the end of 2019. Credit cards, auto loans, and student loans continue to represent the bulk of non-mortgage borrowing, and delinquencies in these categories have contributed to the overall increase in credit stress. While some non-mortgage delinquency rates have stabilized, the data show that borrowers with limited income are more likely to struggle with repayment, particularly as other costs of living remain high.

The report highlighted that households with higher wealth often see their financial situation supported by asset gains and real estate appreciation, allowing continued borrowing and spending. In contrast, families without these resources face a more fragile balance, and the combination of slower wage growth and high debt levels may influence consumer behavior and future borrowing patterns.

Uneven Recovery across Households

The New York Fed report highlights the uneven nature of household credit trends in the United States. While most borrowers continue to manage debts effectively, student loan holders and residents in economically vulnerable regions face persistent challenges. Policymakers and lenders are closely tracking these trends to understand how localized or sector-specific pressures may affect broader financial stability.

As the economy moves further into 2026, the distribution of debt stress is likely to influence household spending, credit availability, and financial planning. The report illustrates that even modest growth in overall credit problems can have meaningful consequences for families with fewer financial buffers, emphasizing that the burden of debt is not shared equally across income levels or regions.