Mortgage Delinquency Rates Improved In Q2 But Show Future Warning Signs

The delinquency rate for mortgages on U.S. residential properties decreased to a seasonally adjusted rate of 3.93% of all loans outstanding at the end of the second quarter of 2025.

That’s according to the Mortgage Bankers Association (MBA)’s National Delinquency Survey, released Thursday.

The delinquency rate was down 11 basis points from the first quarter of 2025 and down 4 bps from Q2 2024. The share of loans on which foreclosure actions were started in the second quarter fell by 3 bps to 0.17%.

“The seasonally-adjusted mortgage delinquency rate declined to 3.93% in the second quarter and remains below the historic average of 5.21% dating back to 1979,” Marina Walsh, MBA’s vice president of industry analysis, said in a statement. “Conventional loan performance continues to perform exceptionally well, with delinquencies hovering near record lows. This contrasts with the rise in government delinquencies over the past few years.”

“While overall mortgage delinquencies are relatively flat compared to last year, the composition has changed,” she added. “Earlier-stage delinquencies declined while serious delinquencies — those loans 90 or more days delinquent or in foreclosure — increased. This was the case in the second quarter of 2025 across the three major product types: conventional, FHA and VA.”

As mortgage delinquency rates fell across all loan types in Q2 2025 on both a quarterly and yearly basis, Walsh said that early labor market weakness — along with rising balances and delinquencies in student, credit card and auto loan debt — could signal future delinquency increases.

The seasonally adjusted late-payment rate dropped to 2.1% for 30-day delinquencies, 0.72% for 60-day delinquencies and 1.11% for 90-day delinquencies. By loan type, conventional delinquencies fell 10 bps to 2.60%, FHA fell 5 bps to 10.57% and VA fell 31 bps to 4.32%.

The foreclosure inventory rate was 0.48%, down 1 bps from Q1 but 5 bps higher than a year ago. The non-seasonally adjusted seriously delinquent rate (90-plus days past due or in foreclosure) was 1.57%, down 6 bps from Q1 but up 14 bps year over year.

States with the largest quarterly delinquency increases were Mississippi and North Dakota (up 42 bps), Ohio (+40 bps), Michigan (+38 bps) and West Virginia (+36 bps). Loans in forbearance were counted as delinquent if payments weren’t made under the original terms.