FHA loans are driving an increase in mortgage delinquencies in the third quarter
Marina Walsh, MBA’s vice president of industry analysis, said the increase in delinquencies was driven by deteriorating performance at Federal Housing Administration (FHA) loans.
“Since this time last year, the FHA rate for serious delinquencies — including delinquencies greater than 90 days and loans in foreclosure — has increased nearly 50 basis points. In contrast, conventional and VA rates for serious delinquencies have remained relatively flat,” Walsh said in a statement.
Walsh noted several stressors for FHA homeowners, such as a weaker labor market, personal debt, and increases in taxes, homeowners insurance and other fees that further exacerbate already strained affordability. She also noted that the drop in home prices in some parts of the country could hamper a homeowner’s ability to sell or refinance.
While the third-quarter 2025 data was unaffected by the end of COVID-era FHA loss mitigation options and the recent government shutdown, these events could impact delinquencies and foreclosure measurements in future quarters, Walsh said.
The seasonally adjusted number of mortgage defaults increased in the third quarter for all types of defaults. Thirty-day delinquencies increased 2 basis points to 2.12%, 60-day delinquencies increased 4 basis points to 0.76% and 90-day delinquencies remained at 1.11%.
By loan type, the delinquency rate for conventional mortgages increased by 2 basis points to 2.62%. FHA delinquencies rose 21 basis points to 10.78%, while those for The U.S. Department of Veterans Affairs (VA) loans rose by 18 basis points to 4.50%.
Year after year, the overall default rate for all loans increased. Conventional delinquencies decreased 1 basis point, FHA delinquencies increased 32 basis points, and VA delinquencies decreased 8 basis points.
Delinquency figures include loans that are at least 30 days delinquent, but exclude loans that are in foreclosure. The bankruptcy rate was 0.50%, an increase of 2 basis points compared to the previous quarter and 5 basis points compared to a year earlier.
The non-seasonally adjusted severe delinquency rate – which measures loans that are 90 days or more delinquent or that have foreclosed – was 1.61%, up 4 basis points from the second quarter and 6 basis points from a year earlier. Quarter over quarter, the serious delinquency rate decreased 2 basis points for conventional loans, increased 30 basis points for FHA loans and decreased 1 basis point for VA loans.
Arizona, Louisiana, Indiana, Iowa and Texas posted the largest quarterly increases in total delinquencies, up 29, 28, 28, 26 and 24 basis points, respectively.
