New York Fed report shows U.S. loan default rate rises to highest level in nearly a decade
In the fourth quarter of last year, the delinquency rate on various types of loans in the United States, including mortgages and credit cards, rose to 4.8% of total outstanding household debt—the highest level since 2017—mainly driven by increased defaults among low-income groups and young borrowers.
The Federal Reserve Bank of New York's Household Debt and Credit Report, released on Tuesday, showed that although the overall proportion of loans in some stage of delinquency is close to the pre-pandemic average, the rising delinquency rate among the lowest income groups further confirms the growing polarization of the U.S. economy.
Researchers at the New York Fed stated that the rise in default rates is mainly due to mortgage repayment delinquencies, which are particularly pronounced in low-income areas. They also noted that the surge in student loan delinquencies has contributed to the overall increase in defaults.
"As household debt levels grow moderately, mortgage delinquency rates continue to rise," said Wilbert van der Klaauw, Economic Research Advisor at the New York Fed, in a press release accompanying the data. "Mortgage delinquency rates are near historically normal levels, but the deterioration is mainly concentrated in low-income areas and regions where housing prices are falling."
The report shows that total U.S. household debt increased by 1% from the previous quarter to $18.8 trillion. The share of credit card loans that were at least 90 days delinquent rose to 12.7%, the highest since the first quarter of 2011; the proportion of auto loans entering serious delinquency rose to 5.2%, just below the record set in 2010.
Researchers also noted that the declining debt repayment ability among low-income and young borrowers corresponds with rising unemployment rates in certain populations. In December last year, the unemployment rate among those aged 16 to 24 was 10.4%, close to the highest level since the worst period of the pandemic in 2021.
About 16.3% of student loans entered delinquent status in the fourth quarter, the largest increase since data records began in 2004.
Editor: Ding Wenwu
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Jensen Huang steps down, and the "biggest patron" of new AI players is gone too
Anthropic's tens-of-billions IPO investment, Figure AI's additional $1 billion, and Nscale's over $5 billion credit guarantee are all in negotiations but their outcomes remain uncertain. Meanwhile, its $500 billion AI financing platform has stalled, and some clients are considering switching to AMD or Google. Successor Kress has a conservative style and has repeatedly vetoed deals aggressively promoted by Jensen Huang, signaling the possible end of Nvidia's era of bold investments.
Applied Materials (AMAT.US) Q4 Earnings Call: CEO Responds to Capacity Mismatch Concerns, Says No Customer Delayed Delivery; System Capacity Expected to Double by 2028
Applied Materials released its financial results for the fourth quarter of fiscal year 2026 (ending October 25, 2026) after the US stock market closed on November 12.
The End of an Era! Semianalysis: Without Jensen Huang, Nvidia Will Become the Next Apple
Semianalysis believes that Jensen Huang’s departure marks the end of a founder-driven era. Nvidia is highly likely to replicate the "post-Steve Jobs Apple model"—shifting from aggressive bets to stock buybacks—which is not beneficial for either technological advancement or shareholders. A greater concern is that the supply chain advantages, customer trust system, and open-source ecosystem moat personally built by Jensen Huang will be difficult for his successor to replicate. By 2028, over 70% of total production capacity may shift to non-Nvidia players.
Crypto prices
More
