19.6% of indebted U.S. households fell behind on loan payments in 2025
Key Facts
The Federal Reserve said in a report issued in October 2026 that 19.6% of U.S. households with debt at the time of the interview reported falling behind on a loan payment in the year before the 2025 survey, up from 12.2% in the 2022 survey. The figure measures indebted households that reported falling behind during a specified period; it does not represent the share of all U.S. households or a daily record of defaults. The report described the increase as sharp and also showed that the share of households 60 days or more behind rose to 8.2% in 2025. That share had increased by more than 3 percentage points since 2022. The report is part of the Federal Reserve’s comparison of household finances between the two surveys, not a real-time count of payment cases.
The report distinguishes the prevalence of late payments from their duration: the 19.6% figure includes those who fell behind on a loan payment, while the 8.2% measure is limited to households at least 60 days behind. The first share rose from 12.2% in 2022, while the second increased by more than 3 percentage points over the same period. The Federal Reserve says the increase in late loan payments was greater than in any of the four previous surveys, or since 2016. As for late payments on financial obligations generally, the report says they reached their highest level since the 2010 survey, a broader characterization that does not apply to the 19.6% figure alone. The Survey of Household Economics and Decisionmaking was conducted in 2025, and its data are collected through interviews repeated every three years.
The rise in late payments coincided with a clear increase in borrowing rates cited in the report between 2022 and 2025. The average interest rate on a 30-year fixed-rate mortgage rose from 4.2% to 6.7%. The average rate on new auto loans also climbed, from 4.9% to 7.7%, while the average credit-card rate rose from 14.6% to 21.4%. The Federal Reserve said the increase in the median debt payment-to-income ratio may be linked to higher interest rates on mortgages and consumer loans. The report presents this link as a possible factor, not the sole explanation for the increase in late payments.
Against this backdrop, real gross domestic product grew about 2.5% annually between the 2022 and 2025 surveys, but the civilian unemployment rate rose from 3.7% to 4.2%, and average annual inflation was 3.6%. At the household level, real median income increased 7%, from $76,900 in 2021 to $82,200 in 2024. By contrast, average real income fell 6%, from $155,300 to $145,200 over the same period. The comparison shows a divergence between the improvement in median income and the decline in average income, alongside higher borrowing costs. The Federal Reserve said stock-market performance and rising home prices boosted household assets, but noted that some of those assets are illiquid and may be difficult to use to repay debt.
The gap between financial pressures and asset gains is also evident in wealth data cited by The Associated Press. The median net worth of the wealthiest 10% of U.S. households rose 31% to $3.6 million between 2022 and 2025. By contrast, the report said higher inflation and interest rates weighed on lower-income households. Wealth growth among the top tier does not mean indebted households have cash available to meet their payments; the Federal Reserve cautioned that some assets can be difficult to convert into money to repay debt. Diverging income trends, alongside rising loan rates, provide context for the widening delinquency recorded by the survey.
Household responses about credit applications showed little change between the surveys. The share of households that did not apply for credit because they feared rejection rose from 12.9% in 2022 to 13.5% in 2025. The share of households that said their application was rejected remained at 10.1% in both years. These figures accompany the rise in late payments, but measure credit-application behavior and outcomes, not loan defaults. The September 2026 Job Openings and Labor Turnover Survey is scheduled for release on November 3, 2026, at 10:00 a.m. Eastern time.