Credit performance weakened across the entire mortgage market in the last three months of 2025 as the national delinquency rate rose to 4.26% on all outstanding mortgages on one- to four-unit residential properties.
The figure reflects a 0.27% bump from the third quarter and 0.28% rise from year-ago levels, according to newly released figures from the Mortgage Bankers Association (MBA).
Despite the broad increase, delinquencies continue to be heavily concentrated among government-mortgage borrowers whose loans are insured by the Federal Housing Administration (FHA), says Marina Walsh, vice president of industry analysis at the MBA.
“The most pronounced uptick was with FHA loans, which reached a delinquency rate of 11.52%, the highest level since the second quarter of 2021,” said Walsh in a Thursday press release announcing the quarterly figures. That reflects a 0.49% annual increase in FHA delinquencies and 0.74% quarterly rise.
For the purposes of MBA’s tracking, the delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The share of loans in the foreclosure process was 0.53% at the end of the fourth quarter.
Government mortgage performance
Government mortgages backed by the Department of Veterans Affairs (VA) had a delinquency rate of 4.6% at the end of the fourth quarter, up 0.1% from the third quarter but 0.1% lower over the year, according to MBA data, underscoring diverging performance trends between low-downpayment borrowers who rely on FHA or VA mortgage programs.
Ginnie Mae is the government-owned mortgage aggregator that pools and securitizes loans from these programs, as well as a small subset of mortgages backed by the U.S. Department of Agriculture.
Quarterly and yearly data published by Ginnie Mae reveals a sharp quarterly uptick in the serious delinquency rate (90 days or more past due) among FHA borrowers in its mortgage-backed securities, rising 1.05% from September through December to land at 4.48%. That serious delinquency rate started 2025 at around 3.49%, on par with third-quarter levels.
The serious delinquency rate among VA mortgages in Ginnie Mae MBS, however, only rose 0.12% from September through December, and at 1.93% landed below the 2.17% serious delinquency rate where it began the year.
Walsh suggested that the increase in FHA delinquency and foreclosure inventory, which reached its highest level since 2020 last quarter, “may have been impacted by the expiration of pandemic-era, FHA relief options as well as disparities in the labor market — a key determinant of mortgage delinquency levels.”
Walsh’s sentiments align with those shared by Daren Blomquist, vice president of market economics at Auction.com, in a recent column published by Scotsman Guide.
“Emergency loss mitigation programs during and after the COVID-19 pandemic helped hundreds of thousands of homeowners avoid foreclosure, but some of those programs drained home equity,” Blomquist wrote. “A growing number of homeowners who utilized those programs are now falling back into default and facing foreclosure with little or no equity left, making foreclosure harder to avoid, with a short sale often the only option.”
Conventional mortgage performance
Conventional loans meeting the underwriting guidelines of Fannie Mae and Freddie Mac remained near historically low levels in the last three months of 2025, ending the fourth quarter at 2.89%, according to the MBA. That figure reflects a combined increase of 0.27% over the quarter and 0.27% over the year.
Earnings reports released this week by the pair of government-sponsored mortgage investors highlighted more nuanced conventional mortgage delinquency trends within their distinct single-family portfolios.
The share of Fannie Mae’s guaranteed single-family portfolio that was 30 days past due rose from 0.94% in the third quarter to 1% at the end of the year, unchanged from where it ended 2024. The company’s share of seriously delinquent loans climbed from 0.59% to 0.63% over the quarter after ending 2024 at 0.6%.
Freddie Mac’s single-family guaranteed portfolio showed slightly higher 30-day delinquency rates than Fannie Mae’s, ending the fourth quarter at 1.09% compared to 1.03% in the third quarter but essentially flat from 1.1% at the end of 2024.
Freddie’s share of seriously delinquent loans, meanwhile, was flat over the year in the fourth quarter at 0.59%, up slightly from 0.57% in the third quarter.
The MBA reported Thursday that its non-seasonally adjusted overall serious delinquency rate, which includes loans that are 90 days or more past due and those in the foreclosure process, was 1.85% at the end of the fourth quarter, up 0.17% year over year.
