Q2 2025—Credit Trends Report

Q2 2025 shows a credit system operating under slower expansion, rising segment-level stress, and widening performance gaps across borrower cohorts. At the macro level, household debt growth moderated as inflation persisted, tariff effects lifted durable-goods prices, and lenders maintained cautious underwriting. Mortgage performance deteriorated further, refinancing volume increased, and home-equity extraction accelerated among older, equity-rich homeowners. Revolving credit expanded at its weakest pace in years despite historically high card APRs. Non-revolving credit growth remained concentrated in student loans and autos, with vehicle financing pressured by elevated prices that pushed auto delinquencies beyond 2009 levels.

At the micro level, borrower segmentation deepened: prime households showed stable utilization and lower delinquency transitions, while subprime and younger borrowers recorded faster repayment deterioration. Bankcard originations grew for the second consecutive quarter, delinquency rates fell year-over-year, and account growth moved back toward pre-2020 patterns. Personal-loan originations climbed across both super-prime and subprime tiers, producing record balances with modest delinquency improvement. Mortgage delinquencies rose for the third straight quarter, driven by FHA borrowers. Auto-loan vintages from 2024 continued to show elevated stress, while used-vehicle cohorts outperformed new-vehicle cohorts. Student loan balances increased, and repayment performance weakened as borrowers re-entered normal reporting cycles.

Across lenders, macro-risk assessments remained conservative: credit standards for consumer products stayed tight, pricing stabilized, and risk-tier differentiation intensified. Household-level behavior reflected constrained affordability, higher reliance on revolving balances, slower pay-down rates, and increased utilization among lower-income borrowers. Overall, Q2 2025 credit conditions show a stabilizing top-line debt market with underlying fragility concentrated in specific products, geographies, and borrower cohorts.

High-Confidence Fact Sheet 

• Total consumer credit (G.19): $5.01T
  
• Non-revolving credit: $3.68T
  
• Revolving credit: $1.32T
  
• Credit card serious delinquency (90+ DPD): 2.17%
  
• Personal loan serious delinquency (60+ DPD): 3.37%
  
• Auto loan serious delinquency (60+ DPD): 1.49%
  
• Mortgage delinquency (60+ DPD): 1.27%
  
• Credit card balances: $1.09T
  
• Personal loan balances: $257B
  
• Mortgage balances: $12.6T

1. Aggregate Consumer Credit — Q2 2025

1.1 Total Credit Balances

Federal Reserve G.19 shows total U.S. consumer credit at $5.01T, rising 1.53% SAAR quarter-over-quarter and 1.93% YoY. The growth rate decelerated, continuing the slowdown observed since late 2024.

Revolving Credit (Credit Cards)

• $1.32T, up 2.36% SAAR, YoY growth 2.98%.
  Growth remains positive but at the weakest pace in several years amid elevated interest rates.

Non-Revolving Credit (Student + Auto Loans)

• $3.68T, up 1.23% SAAR, 1.56% YoY.
  Student loans resumed steady expansion; auto loan growth hit its slowest pace since 2010.

Chart Source: Federal Reserve — G.19 Consumer Credit, Q2 2025

2. Delinquencies and Financial Stress

Q2 shows increasing product-level strain despite overall stability in aggregate indicators.

2.1 Serious Delinquency Rates (Q2 2025)

• Credit Cards (90+ DPD): 2.17%
  
• Auto Loans (60+ DPD): 1.49%
  
• Mortgage (60+ DPD): 1.27%
  
• Personal Loans (60+ DPD): 3.37%
  

Auto delinquencies surpassed 2009 levels, but the pace of deterioration slowed. Mortgage delinquencies rose for a fourth consecutive quarter, approaching pre-pandemic norms.

Chart Source: TransUnion CIIR Q2 2025; FRBNY HHD&C Q2 2025

3. Credit Card Market Conditions

3.1 Balances & Utilization

• Total card balances: $1.09T
  
• Average debt per borrower: $6,473
  
• Number of cardholders carrying a balance: 173.5M
  

Balances track pre-2020 trends and reflect stabilized consumer behavior following twelve months of volatility.

3.2 Originations

Originations increased for the second consecutive quarter after six quarters of declines.

• Prior-quarter originations: 18.5M
  
• New account average credit line: $5,923
  

3.3 Performance

Serious delinquencies fell YoY, indicating gradual recovery in repayment capacity and responsible account management across prime segments.

Chart Source: TransUnion — CIIR Q2 2025

4. Unsecured Personal Loan Market

4.1 Balances & Participation

• Total balances: $257B
  
• Number of loans: 30.1M
  
• Average balance per borrower: $11,676
  

Balances reached a new record, driven by super-prime and prime-plus borrowers.

4.2 Originations

• Originations (viewed one quarter in arrears): 5.4M, up 18% YoY
  
• Super-prime originations: +20% YoY
  
• Subprime originations: +23% YoY
  

Growth reflects refined risk segmentation and broader acceptance of personal loans across income tiers.

4.3 Delinquencies

• 60+ DPD: 3.37%
  Down marginally from Q2 2024, driven by improvement in subprime performance.

Chart Source: TransUnion CIIR Q2 2025

5. Mortgage & Home Equity Trends

5.1 Balances

• Total mortgage balances: $12.6T (FRBNY)
• Number of mortgage loans: 54.6M
  

5.2 Originations

• Originations (Q1 data, reported in Q2): 1.0M, up 5.1% YoY
  Refinance activity continued to strengthen:
• Rate-and-term refis: +44% YoY
  
• Cash-out refis: +15% YoY
  

5.3 Performance

• Mortgage 60+ DPD: 1.27%, up from 1.14% last year.
  FHA loans drove the bulk of delinquencies.

Chart Source: TransUnion CIIR Q2 2025; FRBNY HHD&C Q2 2025

6. Auto Loan Trends

6.1 Originations & Market Mix

• Prior-quarter originations: 6.4M, up 5.9% YoY
  
• Used-vehicle share: 59% (6-point increase YoY)
  Shift driven by affordability constraints and tariff-driven new-vehicle price increases.

6.2 Amounts Financed

• New auto financed amount: $42,549
  
• Used auto financed amount: $26,583
  

6.3 Delinquencies

• Auto 60+ DPD: 1.49%, exceeding 2009 levels
  Delinquency acceleration slowed, suggesting a potential plateau.

Chart Source: TransUnion CIIR Q2 2025; S&P Global Mobility AutoCreditInsight (Apr–May 2025)

7. Student Loan Trends

• Student loan balances (NSA): $1.80T
  
• YoY growth: +2.48%, still below pre-pandemic levels
• Growth reflects normalization after COVID-era forbearance ended in 2023.

Chart Source: Federal Reserve — G.19 Q2 2025

8. Household Accounts & Utilization

FRBNY HHD&C Q2 data indicates continued reliance on revolving credit.

• Credit card accounts: 567.5M
  
• Auto loan accounts: 80.3M
  
• Mortgage accounts: 54.6M
  

Revolving utilization remains elevated across lower-income and younger borrowers.

Chart Source: FRBNY HHD&C Q2 2025

9. Economic & Policy Environment

• Inflation eased relative to 2023 but remained above target.
• Tariffs pushed durable goods and vehicle prices higher.
• Consumer confidence declined.
• Labor-market sentiment weakened.
• Rate expectations suggest potential easing late 2025.

10. Outlook for the Second Half of 2025

• Mortgage originations may strengthen if interest rates fall.
• Auto delinquencies likely remain elevated before stabilizing.
• Student loan stress will persist for several quarters.
• Credit card performance should stay stable with moderate growth.
• Personal loans likely maintain positive momentum due to targeted lender strategies.

11. Scenario Modelling & Expert Interpretation

Scenario	Trigger Conditions	Possible Outcome & Risk	Stakeholder Implication
Baseline / Moderate Stress	Interest rates remain elevated or decline slowly; wage growth modest; inflation stabilizes	Mortgage debt remains stable; unsecured debt (student loans, credit cards, auto) drives gradual delinquency increase	Banks recalibrate stress tests; advisory, debt-management, consolidation demand rises
Economic Downturn / Income Shock	Labor-market softening; inflation or cost-of-living spikes; real incomes shrink for lower/middle income households	Delinquency and defaults rise across unsecured and high-cost credit; increased HELOC use; bankruptcy filings rise	Higher loss-provisions; tighter underwriting; investor risk repricing; media/regulator attention
Refinancing-Relief + Recovery	Interest rates moderate; refinancing viable; incomes recover; inflation eases	Mortgage refinance reduces debt-service; unsecured delinquencies stabilize; consumer sentiment rebounds	Housing market stabilizes; renewed credit demand; lenders cautious on subprime/unsecured
Polarised / “K-shaped” Stress	Economic recovery benefits higher-income borrowers; lower-income, subprime, younger remain under cost/income pressure	Credit divergence: prime/high-income stable; vulnerable borrowers default rises; aggregate debt high but masked by mortgage-heavy portfolios	Lenders face concentrated risk in subprime/unsecured portfolios; inequality in credit access deepens; policy/regulatory monitoring

Disclaimer: These scenarios are analyst assumptions based on reported data, historical trends, and expert interpretation. They are forward-looking and do not constitute financial advice.

Strategic Insights

• Mortgage-heavy debt masks underlying fragility: High mortgage share creates perception of stability; rising unsecured delinquency signals hidden risk.
• Borrower profile drives real risk: Subprime, younger, or lower-income households remain highly sensitive to economic shocks.
• Refinancing cycles are critical levers: Rate declines can relieve mortgage debt but have limited effect on unsecured credit.
• Systemic risk from segmentation: Divergence between prime and vulnerable borrowers may create localized stress clusters.
• Actionable guidance for banks, investors, consultants: Stress-test portfolios by borrower type, consider early-intervention services, and monitor concentration risk and inequality.

Methodology (FRBNY CCP, G.19, TransUnion)

The FRBNY Consumer Credit Panel is a longitudinal 5% sample of U.S. individuals with credit files, expanded to household level. Data includes mortgages, auto loans, card accounts, HELOCs, student loans, and other installment credit. Non-reported accounts older than 3 months are excluded under standard stale-account rules.
TransUnion CIIR originations are reported one quarter in arrears. G.19 incorporates both revolving and non-revolving credit excluding mortgage loans.

Source Index

• Federal Reserve Bank of New York — Household Debt & Credit Q2 2025
• Federal Reserve — G.19 Consumer Credit
• TransUnion — Credit Industry Insights Report Q2 2025
• Equifax — 2025 Consumer Credit Trends
• Experian — Lending Conditions Q2 2025
• S&P Global Mobility — AutoCreditInsight Q2 2025
• Aryza — Insolvency Indicators Q2 2025
• EyeOnHousing — Housing Finance Insights
• Western Asset — Macro Credit Notes