Mortgage Delinquencies Continue Steady Rise In First Quarter

Mortgage Delinquencies continue steady rise in first quarter.

Here’s a full breakdown of the Q1 2026 mortgage delinquency picture:

Overall Rate

The nationwide seasonally adjusted delinquency rate reached 4.44% in Q1 2026, up 18 basis points from Q4 2025 and 40 bps higher than a year ago, according to the MBA’s National Delinquency Survey. Foreclosure starts also ticked up 4 bps to 0.24%.

The FHA/VA Problem

The most alarming trend is the divergence between government-insured and conventional loans:

• FHA loans: 11.88% delinquency rate — up a striking 126 bps year-over-year and reaching the highest foreclosure inventory rate since Q4 2018

• VA loans: 4.99%, up from 4.63% in Q4 — foreclosure rate at its highest since Q2 2017

• Conventional loans (Fannie/Freddie): Only 2.75%, essentially flat on the year

As MBA’s Marina Walsh noted, the spread between FHA and conventional delinquency rates is now ~900 bps — the widest since 2021.

By Stage of Delinquency

• 30-day: 2.24% (+17 bps from Q4)

• 60-day: 0.78% (down 14 bps)

• 90-day (serious, pre-foreclosure): 1.42% (+15 bps)

• Non-seasonally adjusted serious delinquency (90+ days + foreclosure inventory): 2.03% (+40 bps year-over-year)

The NY Fed’s Q1 2026 Household Debt report separately shows the flow into serious mortgage delinquency rose from 1.22% to 1.48% year-over-year, with total mortgage balances at $13.19 trillion.

Who’s Most Exposed

NY Fed research points to a clear bifurcation: borrowers in lower-income zip codes have seen 90+ day delinquency rates surge from ~0.5% to nearly 3.0% since 2021, while higher-income borrowers remain largely insulated. Counties with rising unemployment are also showing meaningfully worse performance, with serious delinquency rates up nearly 0.6 percentage points in the hardest-hit labor markets.

Context

Despite the deterioration, the overall rate remains well below the Great Recession peak (when serious delinquencies exceeded 8%). Tight post-2009 underwriting standards — median credit scores on new originations have stayed above 750 — continue to provide a structural floor. The stress is concentrated in FHA/VA borrowers and lower-income geographies, not the broader mortgage market.