Home equity hits $18T even as delinquencies, foreclosures rise

Home equity reached a record $18 trillion in the second quarter as annual home price growth accelerated to a 14-month high in July, while mortgage delinquencies and foreclosure activity continued to rise, according to Intercontinental Exchange (ICE)’s August Mortgage Monitor report.

Annual home price growth rose to 1.5% in July, marking the fifth consecutive month of acceleration and its strongest single-month increase in more than three years.

ICE said lower mortgage rates earlier in 2026 helped boost housing demand, although rates have since moved higher and could limit further acceleration in the second half of the year.

“Mortgage holder equity hitting $18 trillion is a remarkable milestone — one that reflects just how much wealth American homeowners have built,” said Andy Walden, head of mortgage and housing market research at ICE.

“The spring market provided a meaningful boost to both prices and equity, and we’re seeing those tailwinds work through the data now. At the same time, rates have trended higher since early in the year, which may soften how much additional acceleration we’re likely to see in the second half.”

Mortgage holders had $11.7 trillion in tappable equity in the second quarter, with about 47.5 million borrowers holding an average of $212,000 each.

Total mortgage debt surpassed $15 trillion for the first time, although mortgage debt remained well below historical levels relative to home values.

At the same time, 813,000 mortgage holders remained underwater, up 44% from a year earlier. About 320,000 borrowers were both underwater and behind on payments entering the third quarter, nearly double the number recorded a year earlier. Texas and Florida accounted for 39% of underwater homes nationwide.

Mortgage delinquencies rose modestly in June. The national delinquency rate increased 5 basis points to 3.55%, roughly half the typical seasonal increase, but remained below the 4.16% rate recorded in June 2019.

The share of mortgages in active foreclosure reached 0.53%, its highest level in six years, although it remained below the pre-pandemic benchmark of 0.57%. Foreclosure starts reached 43,200 in June, also a six-year high. Foreclosure sales totaled 7,300, up 16% from a year earlier but still 46% below 2019 levels.

Loans originated in 2022 or later accounted for nearly 35% of active foreclosure inventory, as borrowers who purchased during the higher-rate environment and have seen limited subsequent home price appreciation make up a growing share of distressed mortgages.

Despite the increase in foreclosure activity, new defaults have not accelerated broadly. Borrowers entering default were down 4% year over year in June and 2% in the second quarter. New Federal Housing Administration (FHA) loan defaults fell 15% year over year in June, driven in part by a 24% decline in FHA re-defaults. New Department of Veterans Affairs (VA) loan defaults, however, rose 25% in the second quarter.

Serious delinquencies remain concentrated among government-backed loans. The share of FHA mortgages at least 90 days delinquent or in active foreclosure stood at 5.7% in June, up 1.8 percentage points from a year earlier. For VA loans, the share was 2.3%, up 0.4 percentage points.

Mortgage rates, pricing differences

Mortgage rates climbed through July, ending the month near 6.7%, their highest level since the same period last year. ICE attributed the increase to a nearly 30-bps rise in 10-year Treasury yields.

Borrowers with similar credit profiles also continued to receive significantly different rates depending on their lender. Among conforming purchase borrowers, rates varied by about 38 bps across the middle 50% of outcomes and 82 bps between the 10th and 90th percentiles. On a $300,000 mortgage, that translates to monthly payment differences of about $76 and $162, respectively.

“Whether it’s identifying borrowers at risk of refinancing away, understanding where rate variation is costing customers, or tracking equity trends that create new lending opportunities, ICE’s integrated data and technology platform gives servicers and lenders the insight they need to move first,” said Bob Hart, president of mortgage technology at ICE.

This article was generated using HousingWire Automation and reviewed by a HousingWire editor before publication.