Serious delinquencies for Federal Housing Administration mortgages rose to their highest level in two decades during the second quarter, according to newly released credit data published Thursday by TransUnion.

Loans backed by the FHA, which is part of the U.S. Department of Housing and Urban Development, accounted for more than 47% of balances 60 days or more past due as mortgage performance on government books continued to soften.

But overall mortgage balances posted steady year-over-year growth from April through June, the national credit bureau reported, rising 2.8% to about $13.1 trillion as of the end of the second quarter. That figure reflects 13% annual growth in originations to about 1.5 million.

“While overall mortgage performance remains relatively stable, the concentration of serious delinquency among FHA loans warrants monitoring,” said Satyan Merchant, senior vice president and mortgage business leader at TransUnion, in the firm’s latest mortgage credit report.

After the U.S. and Israel started the Iran war in late February, average mortgage rates for typical 30-year loans jumped from about 6% in the first quarter to 6.5% by the end of June, according to Freddie Mac data.

They remained lower than average 30-year rates between 6.6% and 6.9% during the second quarter of 2025, however. Elevated rates a year ago reflected a spike in business uncertainty and higher inflation expectations following President Donald Trump’s “Liberation Day” tariff announcement in early April.

Refinance volumes rose about 40% year over year in the second quarter of 2026 but only increased their overall share of originations to 21.5% from 17.4% a year earlier.

Low refinance share has plagued the mortgage market since late 2022, with annual refinance production amounting to just 15%, 21% and 29% of origination share from 2023 to 2025, per Fannie Mae data.

“Lower rates created a meaningful lift in mortgage activity during the second quarter, particularly for refinance and home equity lending,” added Merchant.

Home equity originations — including home equity lines of credit (HELOCs), closed-end second liens and cash-out refinances — rose more than 13% by total loan counts, representing more than $113 billion in production during the second quarter.

HELOCs accounted for 43% of home equity originations — up from a 40.6% share in the year-ago period — as borrowers holding onto ultra-cheap pandemic-era mortgages sought to tap equity but maintain their first-lien loans. But cash-out refinances increased 30% year over year, raising its share of home equity originations to around 20% from an 18% share recorded during the second quarter of 2025.