The delinquency rate for mortgages on one-to-four-unit residential properties increased to a seasonally adjusted rate of 3.99% of all loans outstanding at the end of the third quarter, according to data from the Mortgage Bankers Association (MBA).
The delinquency rate was up 6 basis points from the second quarter and up 7 basis points from the third quarter of 2024. The percentage of loans on which foreclosure actions were started in the third quarter rose by 3 basis points to 0.20%.
“Mortgage delinquencies increased in third quarter of 2025, led by worsening FHA loan performance,” said Marina Walsh, MBA’s vice president of industry analysis. “Since this time last year, the FHA seriously delinquent rate – which includes 90-plus day delinquencies and loans in foreclosure – increased by almost 50 basis points. In contrast, the conventional and VA seriously delinquent rates remained relatively flat.”
Walsh added that while the third quarter results were not impacted by the ending of Covid-era FHA loss mitigation options and the recent government shutdown, “The stressors on FHA homeowners include a softer labor market, other personal debt obligations, and increases in taxes, homeowners’ insurance and other fees that exacerbate already stretched affordability. Additionally, home price declines in some parts of the country may lessen the ability to sell or refinance.”
Whoa, hold onto your hats! Looks like the mortgage delinquency party started in the third quarter. Fun times! Seriously though, it’s interesting to see FHA loans leading the parade – not sure if that’s a celebratory march or a concerning procession. The reasons cited are pretty relatable in this economy: less job security, other debts piling up, and surprise! taxes and insurance rising. It’s like a bad dream where affordability keeps getting stretched tighter. Home prices dropping in some areas just adds another layer to the sell or refinance conundrum. Not exactly the housing market utopia some might hope for!