Residential mortgage performance softened across the board in August as elevated housing costs continue to weigh on household budgets.
The national delinquency rate rose to 3.53% in August, up 14 basis points from July, according to ICE Mortgage Technology’s latest monthly snapshot of industry trends.
Borrowers facing serious payment stress accounted for much of the increase, though the report noted that the “30-, 60- and 90-plus-day buckets were all higher on the month.”
The number of seriously delinquent loans not yet in foreclosure increased by about 11,000 over the month to hit 574,000, roughly 92,000 higher than a year ago. That figure is approximately 93,000 more than levels observed in August 2019.
However, loans 30 days past due were below year-ago levels, as were the number of 60-day delinquencies. Combined, early-stage delinquencies were 21,000 lower than a year ago.
New defaults among mortgages insured by the Federal Housing Administration (FHA) were 15% lower from a year ago. That marked the third straight month of annual declines in new FHA defaults.
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In contrast, new defaults on loans meeting Fannie Mae and Freddie Mac’s guidelines jumped 18% annually, their largest increase since the start of 2025. New defaults on mortgages backed by the Department of Veterans Affairs (VA) also rose sharply, up 23% from a year ago.
While foreclosure starts declined by 6% from July, the volume of loans in active foreclosure increased by 2,000 to land at 298,000, the highest level since February 2019 but the smallest monthly gain since last November.
Borrower stress continues to vary considerably by loan vintage. While millions of borrowers with pandemic-era loans enjoy mortgage rates below 4%, borrowers with loans originated after the Federal Reserve hiked interest rates in 2022 face significantly higher payments.
“Recent vintages remain the focus, with 2022-2026 vintage starts rising 2% for the month,” said ICE. Of the nearly 300,000 loans in active foreclosure in August, post-2022 originations account for more than one-third.
Cure rates for serious delinquencies — which reflect the share of loans that transition from past due to current status — declined across the FHA and Fannie and Freddie cohorts in August, while remaining largely unchanged for VA borrowers. The overall cure rate declined to 7.8% in August from a nine-month high of 8% in July.
