FHA drives rise in mortgage delinquencies above pre-pandemic levels
Overall delinquency rates before the pandemic were in roughly the same ballpark, Merchant said, but the mix of loan types behind them was different.
“FHA is becoming more of the driver of delinquency versus maybe back pre-pandemic, it was a more even spread of the drivers, like the different loan types, Fannie, Freddie, Jumbo, et cetera,” Merchant said. “It actually gives us more clarity on where to keep our eye on at the moment, which is FHA.”
Nearly half of mortgages 60 days past due, 47.2%, are FHA loans, the highest concentration in more than 20 years. Their delinquency rate reached 5.60%, up from 4.09% a year earlier.
Performance on Fannie Mae, Freddie Mac and jumbo loans remained stable. The recent mortgage vintage is also performing well in its early months relative to loans originated from 2022 to 2024.
FHA’s share of new originations has declined to 18.5%, though its share of balances keeps rising. FHA borrowers typically carry higher loan-to-value ratios and smaller down payments, he said.
