Credit Sesame’s personal finance news roundup May 31, 2025. Stories, news, politics and events impacting personal finance during the past week.
Auto loan surge tied to tariff fears
The VantageScore CreditGauge reported that borrowing increased over the past year across all categories: auto loans, credit cards, mortgages and personal loans. Growth was strongest in the auto loan category. A VantageScore executive noted that “buyers appear to have accelerated their car purchases in anticipation of higher sticker prices due to the recently implemented tariffs.” Ironically, these accelerated purchases would have primarily benefited vehicle sales outside the US. In any case, the surge in auto loans has pushed borrowing in that category above pre-pandemic levels. See news release at VantageScore.com.
Americans feel stable but still wary of inflation
The Federal Reserve’s annual Survey of Household Economics and Decision-making found that 73% of adults described their financial situation as “okay” or “living comfortably.” This result was up slightly from the year before, but below the recent peak of 78% in 2021. Inflation remained the leading concern of consumers. 29% rated the national economy as “good” or “excellent.” That was up from 22% in 2023, but below the pre-pandemic level of 50%. Parents continue to face high childcare costs. Just over half of parents paying for childcare said it cost more than 50% of what they spend on housing. In light of those high childcare costs, 46% of parents of children under age 13 use unpaid childcare provided by someone other than the child’s parents, compared with 24% who use paid childcare. The newly released data come from a survey taken last October 2024, so the results reflect perceptions of the economy at that time. See report at FederalReserve.gov.
Confidence rebounds slightly in May 2025
The Conference Board’s Consumer Confidence Index had its first increase in May following five straight months of declines. The index rose by 14% in May, but remains well below where it was when the five-month slide started. The expectations component of the index remains depressed to a level that has traditionally been associated with recessions. The survey found that consumers are far more concerned about the affordability of wants and needs than job security. In terms of the impact of economic uncertainty on consumer behavior, 19% of respondents said they had made purchases sooner to get ahead of tariffs. On the other hand, 26% said they had cancelled or postponed major purchases. See news release at Conference-Board.org.
Credit scores predict overdraft risk
A Federal Reserve Bank of New York study found that low credit scores are the best predictor of whether bank customers are likely to overdraft their accounts. Only about 20% of bank customers ever overdraft their accounts. As has often been cited before, income level and ethnicity are related to the likelihood of overdrafts. However, when adjusted for credit scores, different income and ethnic groups tend to have roughly the same incidence of overdrafts. Variation in credit scores more closely predicts the probability of an overdraft. This probability is highest among people with credit scores below 620. That probability drops with each step up in credit score tier. People with scores below 620 are 50% more likely to have overdrafted a bank account than those with scores above 760. See report at NewYorkFed.org.
GDP revision confirms early 2025 slowdown
The Bureau of Economic Analysis put out a revised estimate that showed the economy shrank at an annual rate of 0.2% in the first quarter of 2025. That estimate is net of inflation and after seasonal adjustment. The decline of 0.2% marked a sharp reversal after a solid 2.4% growth rate in the fourth quarter of 2024. The latest estimate was the second of three planned official Gross Domestic Product estimates. See news release at BEA.gov.
Home prices up for third straight month
The latest update of the S&P CoreLogic Case-Shiller National Home Price Index showed that home prices rose by 0.76% in March. That was the third monthly increase in the index, after it declined overall in the second half of last year. Home prices have risen by 1.34% in 2025 and 3.37% over the past 12 months. See data at SPGlobal.com.
Mortgage rates keep climbing
30-year mortgage rates rose for a third consecutive week. They increased by three basis points over the past week to 6.89%. That’s their highest level since early February. 15-year mortgage rates also had a slight increase last week, rising by two basis points to 6.03%. Revived inflation fears have pushed mortgage rates substantially higher since their recent low point at the end of last September. See mortgage data at FreddieMac.com.
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