Mortgage Delinquency Explodes in 2025: What It Means for Investors and Homeowners
Below is an overview a recent Forbes article on increasing mortgage delinquencies:
Mortgage delinquencies are surging at a pace that’s alarming both lenders and investors.
According to May 2025 data from VantageScore, delinquencies have increased faster than any other category of consumer credit, suggesting growing financial strain among American homeowners.
Defaults have reportedly jumped more than 200% over the past six months. While many expected this to hit lower-income or subprime borrowers first, the spike is actually centered among middle-income homeowners—especially those holding adjustable-rate mortgages (ARMs), FHA loans, or VA loans. These borrowers are being squeezed by rising interest rates, inflated living costs, and stagnant wages.
Insurance costs are a key factor accelerating the problem. Homeowners insurance premiums in states like Florida, Georgia, and North Carolina have increased dramatically, rising over 20% between 2022 and 2024, with further hikes projected in 2025. For borrowers already stretched thin, the added cost has tipped many into delinquency. As a result, FHA and VA delinquency rates have climbed significantly in 2025, while conventional loan defaults remain near record lows.
Nationally, the overall mortgage delinquency rate rose to 3.2% in May 2025—up 16 basis points from the year before. But that headline number hides the deeper issue: early-stage delinquencies, especially among government-backed loans, are rapidly increasing.
Weitz - Obviously not a surprise if you read this blog with any regularity. To be clear, 3.2% of every mortgage is in some sort of default.
Can you imagine if this trend continues and we get to 5%....that's a HUGE number. Even at 3.2%, I see major issues coming, but will continue to review the data and adjust opinions accordingly. For now, I think the smart money is sitting patiently.
Scott Weitz
Scott@Weitzcommercial.com
Snohomish County Commercial Real Estate Advisor
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