Mortgage Delinquencies Accelerate Faster Than Other Consumer Debt

2026-02-04 economy

New York, Wednesday, 4 February 2026.
As of February 2026, a significant shift in consumer credit dynamics has emerged: the growth rate of late-stage mortgage delinquencies is now outpacing that of auto loans and credit cards. Data from December 2025 highlights an 18.6% year-over-year increase in severe delinquencies, signaling that the housing affordability crisis has migrated from prospective buyers to existing homeowners. This trend challenges the assumption that homeowners are insulated from economic stress, suggesting that rising non-mortgage costs—such as insurance and property taxes—are eroding household stability even among those with fixed-rate loans.

Delinquencies Outpace Other Credit Types

Rikard Bandebo, Chief Economist at VantageScore, emphasizes that while the current delinquency rate is considerably lower than during the financial crisis, the speed at which these numbers are climbing is a “concerning sign” [1]. By December 2025, late-stage mortgage delinquencies—those at least 90 days past due—had risen 18.6% compared to the previous year [1][3]. This uptick brought the share of severely delinquent mortgages to approximately 0.2%, an increase from just under 0.17% in December 2024 [3][6]. Notably, this growth in mortgage delinquencies is occurring at a faster pace than late payments for other forms of consumer credit, such as auto loans and credit cards [1][3].

The Inflation of Ownership Costs

The driving forces behind this trend extend beyond mortgage interest rates, suggesting a deeper affordability strain on existing homeowners. From January 2020 through December 2025, homeowners insurance premiums surged by 31.3%, with a 6.5% increase recorded in 2025 alone [1][6]. Simultaneously, home prices jumped 54.5% between January 2020 and November 2025, increasing the property tax burden for many households [1]. These escalating fixed costs are eroding the financial stability of homeowners, contributing to a decline in the average VantageScore credit score, which dropped to 700 in December 2025 [1][4].

Commercial Stress and Market Realities

While residential borrowers face tightening budgets, the commercial sector is exhibiting even more acute distress. In January 2026, the Commercial Mortgage-Backed Securities (CMBS) delinquency rate climbed to 7.47%, driven largely by the office sector, which hit a record high delinquency rate of 12.34% [5]. In contrast, government-sponsored enterprises report more stable figures; Fannie Mae’s single-family serious delinquency rate rose only marginally to 0.58% in December 2025, while its guaranty book expanded at an annualized rate of 1.1% [2]. This divergence highlights how credit stress is distributing unevenly across the economy, with commercial office space and cash-strapped residential homeowners bearing significant weight.

The Improbable Path to Normalcy

Restoring housing affordability to pre-pandemic levels remains a statistically daunting prospect. Analysis indicates that for affordability to normalize, one of three drastic market corrections would need to occur: mortgage rates would need to fall to approximately 2.65%, median household income would need to surge by 56% to $132,171, or median home prices would need to plummet by 35% to $273,000 [1][6]. With such corrections unlikely in the near term, financial planners like Thomas Blackburn advise caution, warning that “just because a lender approves you for a certain amount doesn’t mean you should spend it” [1].

Sources

Housing Market Mortgage Delinquency