Broad softening in fourth-quarter mortgage loan performance continued into the first quarter, with accelerated weakness among government-insured borrowers, according to newly released data from the Mortgage Bankers Association (MBA).
The nationwide seasonally adjusted delinquency rate was 4.44% through the first three months of 2026, 18 basis points higher than the fourth quarter and 40 bps higher from a year ago, the MBA reported Thursday.
Delinquencies on loans backed by the Federal Housing Administration (FHA), however, remained concerningly elevated in the first quarter, increasing 126 basis points from a year ago to reach 11.88% in the first quarter, up from 11.52% the previous quarter. The delinquency rate on loans insured by the Department of Veterans Affairs (VA) rose to 4.99% from 4.63% in the fourth quarter.
Marina Walsh, vice president of industry analysis at the MBA, flagged the concentrated weakness in this week’s report.
“Last quarter, the delinquency rate for FHA loans was about 900 basis points higher than the conventional delinquency rate, and the VA delinquency rate was almost 225 basis points higher than the conventional delinquency rate,” noted Walsh. “These are the widest spreads since 2021.”
The conventional delinquency rate on mortgage loans underwritten to Fannie Mae and Freddie Mac guidelines only ticked up five basis points over the year while declining 14 bps from the fourth quarter to land at 2.75%.
By stage of delinquency, loans 30 days past due rose 17 bps from the fourth quarter to 2.24%, while 60-day delinquencies declined 14 bps to 0.78%. The serious delinquency rate on loans that were 90 days past due in the first quarter but had not yet entered into the foreclosure process increased 15 bps to 1.42%.
The non-seasonally adjusted serious delinquency rate, which includes loans 90 days delinquent and foreclosure inventory loans, rose 18 bps over the quarter and 40 bps from a year ago to land at 2.03%. However, borrowers in later stages of payment stress were also concentrated among government borrowers, the MBA reported.
While serious delinquencies eased slightly on a quarterly and annual basis for conventional loans, serious delinquencies rose 94 bps for FHA loans and three basis points for VA loans over the quarter. Rates for 90-day delinquencies were 212 bps higher over the year for FHA loans and 10 bps higher for VA loans.
Walsh noted that foreclosure inventory rates for FHA hit loans their highest levels since late 2018, while VA loans saw their highest rates of foreclosure since early 2017. But she offered the caveat that changes to loan performance reporting amid the expiration of emergency pandemic-era FHA loss mitigation options last fall may have affected FHA delinquency numbers.
