Households are running late on their debt payments, and transitions into serious delinquency are growing across debt types. In 2021 and 2022, debt balances shrunk and the share of delinquent accounts decreased dramatically. Since then, however, the pendulum has swung in the other direction. In the first quarter, the share of newly delinquent and seriously delinquent balances exceeded prepandemic numbers in auto loans, credit cards, mortgages, home equity lines of credit and other debt types.

While seriously delinquent student loans haven’t surpassed 2020 levels, they rose from less than 1% last quarter to over 8%, as servicers began reporting late accounts after a pause in payments and subsequent on-ramp period.  

There’s a chance the share of delinquent accounts will continue growing during this period of higher interest rates and economic uncertainty. The likelihood of missing a #debt payment continues to grow, according to data out last week from the New York Fed.

Delinquent accounts can impact your credit and financial security for years. When households anticipate they may be late on a debt payment — that’s when they should be reaching out to their bank or issuer. Depending on the account type, lenders and credit issuers may be willing to work out an arrangement that makes payments easier, whether that means adjusting the due date or even renegotiating the terms of a loan. Waiting for the account to go into collections can make recovering from a tough financial situation even more difficult.

Today’s HHDC data release from the NY Fed: https://lnkd.in/gdNgtu6D