What's Happening?
Recent data indicates an increase in mortgage delinquencies, with late-stage delinquencies rising by 18.6% in December compared to the previous year. According to VantageScore, the share of mortgages over
90 days past due is now at 0.2%, up from 0.17% in December 2024. This trend is occurring amidst ongoing housing affordability challenges, as home prices remain high despite some easing. The Federal Reserve Bank of St. Louis reports that overall mortgage delinquencies were 1.78% in the third quarter of 2025, slightly up from 1.74% a year earlier. The rise in delinquencies is contributing to a decline in the average VantageScore credit score.
Why It's Important?
The increase in mortgage delinquencies underscores the financial strain faced by homeowners amid persistent housing affordability issues. Rising home prices and elevated mortgage rates have priced many potential buyers out of the market, while existing homeowners struggle with unexpected costs and high property taxes. The situation reflects broader economic challenges, including inflation and stagnant wage growth, which are impacting consumer financial health. The trend could have implications for the housing market, financial institutions, and policymakers, as they navigate the complexities of maintaining housing stability and affordability.
What's Next?
Addressing housing affordability will require coordinated efforts from policymakers, financial institutions, and the real estate industry. Potential solutions include increasing housing supply, implementing policies to stabilize mortgage rates, and providing financial assistance to struggling homeowners. The Federal Reserve and other regulatory bodies may need to monitor the situation closely to prevent a broader impact on the financial system. Additionally, homeowners are advised to maintain financial reserves to manage unexpected expenses and consider refinancing options to reduce mortgage costs.
