Delinquencies, Charge-Offs Rise As Consumer Sentiment Weakens

Delinquencies and charge-offs increased across various consumer lending segments in October 2025 as consumer sentiment weakened, reflecting financial stress and caution among households.​

Delinquency Trends

• The average delinquency rate for consumer loans rose to 2.81% in October 2025, up from 2.75% in September, though it remains below the October 2024 rate of 3.14%.​

• Subprime auto loan delinquencies notably increased, with 60+ day delinquencies rising to 6.65% in October, up from prior months—a record high for recent years.​

• Early-stage delinquencies (30–59 days past due) also edged higher in September, approaching pre-pandemic levels.​

• Credit card and other consumer debt categories showed increasing rates of missed payments, suggesting growing strain on household finances.​

Charge-Off Patterns

• Charge-off rates for large credit card issuers and lenders rose in October 2025.

  • Capital One’s net charge-off rate was 4.77% in October, though this was actually an improvement from 5.82% the year prior.​

  • Synchrony Financial’s adjusted net charge-off rate also ticked up to 5.3%.​

• Rising charge-off rates reflect lenders writing off more bad debt, typically after extended delinquency periods.

Consumer Sentiment

• The University of Michigan’s Consumer Sentiment Index declined by 1.5% in October to 53.6%, marking a third consecutive monthly drop, indicating Americans’ weakening outlook amid inflation and a softer labor market.​

• The Conference Board’s Consumer Confidence Index dipped by 1 point to 94.6, with inflation and job worries cited as key headwinds.​

• While the overall global sentiment was stable, U.S. sub-indices related to current economic conditions and investment weakened, suggesting nervousness about the near-term outlook.​

Sector and Product Breakdown

• Subprime borrowers, especially in auto loans, are showing more pronounced stress, while credit card and personal loan delinquencies have been rising steadily.​

• Mortgage delinquency rates, particularly in late-stage accounts, rose in September 2025 and continued to trend higher in October.​

Key Drivers

• Elevated prices, a softening labor market, and lingering inflation are the most frequently cited reasons for weakening consumer confidence and rising credit distress.​

• The trend is especially acute in lower-credit and subprime segments, but broader consumer portfolios are also showing new signs of strain.​

In summary, October 2025 saw a clear rise in delinquencies and charge-offs, particularly among riskier borrowers, as consumer sentiment declined in the face of persistent economic pressures.​