Student loan delinquencies jumped, and housing distress is building

"Delinquency rates across mortgages, credit cards, auto loans and student debt have climbed to their highest levels in nearly a decade, reaching 4.8% of outstanding household debt in the fourth quarter. While headline numbers remain within long-term historical ranges, a closer look reveals where stress is building: lower-income ZIP codes, younger borrowers, and markets experiencing slowing or declining home values."

"These trends reflect a growing bifurcation in household finances. Higher-income and equity-rich homeowners continue to perform well, while more financially vulnerable borrowers are encountering mounting pressure from inflation, job instability and rising debt burdens."

"Foreclosure filings have increased materially over the past year, with many states posting double-digit and, in some cases, triple-digit year-over-year gains. Auction volumes and default notices are now well above pre-pandemic norms, reflecting a growing pipeline of distressed properties moving through servicer systems."

Federal Reserve data shows household credit delinquencies climbing to nearly decade-high levels at 4.8% of outstanding debt in the fourth quarter. Stress concentrates in lower-income areas, younger borrowers, and markets with declining home values—historically early indicators of housing disruption. Mortgage delinquencies rise in communities with limited equity, while credit card delinquencies match 2011 levels, auto loan defaults approach post-crisis highs, and student loan delinquencies surge after pandemic forbearance ended. A bifurcation emerges: higher-income, equity-rich homeowners perform well while vulnerable borrowers face inflation, job instability, and rising debt burdens. Foreclosure filings increased materially with many states posting double-digit and triple-digit year-over-year gains. Auction volumes and default notices exceed pre-pandemic norms, reflecting growing distressed property pipelines.

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