Photo by: Lindsey Nicholson/UCG/Universal Images Group via Getty Images Home prices are becoming increasingly expensive, making it harder for many to keep with their mortgage payments.

KEY TAKEAWAYS

  • Early-stage mortgage delinquency rates in May increased faster than any other debt type.
  • As home prices reach record highs and mortgage interest rates remain elevated, homebuyers have had to take out large mortgages.
  • Larger mortgage balances have put pressure on homeowners and likely caused an increase in delinquencies.

Mortgage costs are at an all-time high, and borrowers are having difficulty keeping up with their payments.

In May, early-stage mortgage delinquencies posted the largest month-over-month increases of any other debt type, according to a report from VantageScore, a credit scoring company. That’s particularly notable, since borrowers usually prioritize their mortgage debt over other loans, making it less common for them to fall behind on their house payments.

Delinquency rates on mortgages in May were still lower than on other loan types, such as auto loans, credit cards, and personal loans. However, that month, mortgage loans that were 30 to 59 days past due increased by 0.10%, and those that were 60-89 days past due increased by 0.06%. The only category in which mortgage delinquencies did not grow was late-stage delinquencies, 90 to 119 days past due.

Since the post-pandemic housing boom, homebuyers have had to take out larger mortgages. Home prices recently reached a new record high, and interest rates on mortgages remain elevated. Currently, there are only three of 50 American metropolitan areas where a homebuyer can find an affordable home.

As the size of homebuyers’ mortgages increase, it is harder for many to keep up with their payments. The average American homeowner’s mortgage balance rose to $267,700, up $7,288 from the same time last year. That’s an increase of 2.8% from May 2024, and the highest year-over-year jump compared to other loan categories, including autos, credit cards, and personal loan balances, according to VantageScore.

Mortgage delinquencies are up in large part due to inflation, VantageScore executive Anthony Hutchinson, said in a recorded round table.

“[First,] the cost of all goods is going through the roof. Two, [you have] inflation in terms of home prices,” Hutchinson explained. “So a product that was on the market that cost maybe $300,000 a year ago is substantially more than that right now, and that’s putting pressure on the consumer.”

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