In the second quarter of 2026, large bank credit card balances increased, although the growth of revolving balances slowed down. This suggests borrowers are carrying less recent spending as debt. Delinquency and net charge-off rates also declined, indicating improved debt management. As credit availability expands, the share of new credit card accounts going to consumers with lower credit scores grew from 16.1 percent in Q2 2025 to 18.5 percent in Q2 2026.

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Credit card dollar originations rose by 1.5 percent year over year, marking the smallest increase in five consecutive quarters of growth. New credit card accounts saw a sharper increase of nearly 4 percent. Consequently, the average new credit line decreased from $6,216 in Q2 2025 to $6,066. This decline can be attributed to a shift toward borrowers with lower credit scores, whose new accounts typically feature smaller credit lines. Despite recent growth for lower-score borrowers, the median new credit line for those with scores below 660 remains lower than in previous years.

Large banks are cautiously expanding credit access to riskier segments while maintaining strict lending standards. The share of new accounts for borrowers with scores below 660 is still significantly below the historical peak of 27 percent. Recent findings from the July 2026 Federal Reserve Senior Loan Officer Opinion Survey indicate continued tight lending standards for subprime credit cards.

Total credit card balances rose by 3.4 percent from a year earlier, setting a new record, while the growth rate for revolving balances has slowed significantly. This shift suggests that an increasing portion of total balances is due to nonrevolving purchases. High credit card interest rates may be motivating consumers to pay off balances swiftly, aided by larger tax refunds in 2026. Payment behavior reflects this, with 37 percent of accounts making full payments, matching the peak observed during the pandemic.

Delinquency and charge-off rates continue to trend downward, nearing pre-pandemic levels. However, improving metrics may also reflect stricter lending practices, as financial pressures persist for some households.

In the mortgage sector, large banks originated almost 144,000 new first-lien residential mortgages in Q2 2026, a 15 percent increase compared to the previous year, yet still below pre-2022 levels. The total dollar volume of originations was $89 billion, constituting about 17 percent of the housing market, with first-lien mortgage balances in large bank portfolios reaching nearly $1.5 trillion.

Refinancing activity contributed to growth in mortgage originations, although overall volumes remain subdued compared to prior years. Rate-and-term refinance amounts reached $18.1 billion and cash-out refinance amounts $11.3 billion, both significant year-over-year increases. However, quarter-over-quarter numbers showed a decline in rate-and-term refinances due to rising mortgage rates.

Home purchase originations saw a modest annual increase of about 6 percent but are still below historical norms, exacerbated by high mortgage rates that have dampened demand and resulted in a "lock-in" effect for many homeowners.

The severe delinquency rate for mortgages held by large banks was 0.86 percent in Q2 2026, down from 0.96 percent a year earlier. This remains close to historical lows, with stringent credit standards ensuring strong loan performance. The 10th percentile credit score for mortgage originations was over 700, surpassing pre-pandemic levels.