Mortgage performance steady in May as calendar drives delinquency bump

U.S. mortgage performance remained stable in May even as headline delinquencies rose due to a Sunday month-end that pushed some payments into June, according to Intercontinental Exchange (ICE)’s First Look report released Friday.

The national delinquency rate climbed 15 basis points in May to 3.50%, up 4.5% from April, ICE reported. Delinquencies are still below pre-pandemic levels from January 2020, suggesting the increase was more about calendar noise than a sign of broad deterioration.

“While the headline increase in delinquencies may draw attention, the underlying performance picture is stable as delinquencies remain below January 2020 levels,” Andy Walden, head of mortgage and housing market research at ICE, said in a statement.

Walden attributed the rise in early-stage delinquencies and a month-over-month decline in cures largely to the Sunday month-end, which delayed processing of some payments to the next business day.

Late-stage delinquencies, foreclosure inventory

Serious delinquencies — loans 90 or more days past due but not in foreclosure — held flat from April at 577,000 loans, a five-month low on a seasonally adjusted basis. But serious delinquencies are up 111,000 from May 2025, the largest annual increase since 2020, underscoring mounting stress among a segment of borrowers.

Late-stage delinquencies — those that are seriously delinquent or in active foreclosure — increased by 185,000 year over year, also the biggest annual jump since the pandemic-era unemployment spike in 2020. That trend suggests more borrowers are remaining in distress longer, despite headline performance looking comparatively healthy.

Foreclosure activity also moved higher on a year-over-year basis. Active foreclosure inventory rose to 280,000 loans in May, up 4,000 from April. The figure was up 34% year over year for the highest level in six years, ICE reported. The pre-sale foreclosure inventory rate increased to 0.51% and remains below pre-pandemic norms.

Foreclosure starts declined nearly 9% from April to 33,000 but were still about 19% higher than in May 2025. Completed foreclosure sales totaled 7,000, down 11% month over month and roughly flat from a year earlier.

In total, 1.932 million properties were at least 30 days past due but not in foreclosure at the end of May, up 84,000 month over month and 188,000 higher year over year. When including loans in foreclosure, 2.212 million properties were either delinquent or in the foreclosure process, an increase of 88,000 from April and 262,000 from a year earlier.

Refis slow as mortgage rates rise

Prepayment activity continued to cool as mortgage rates ticked higher. The single-month mortality rate, a common measure of prepayments, fell 15% from April to 0.79% in May, a four-month low. Even with the decline, the rate remained about 8 bps above year-ago levels, reflecting slightly more refinance and housing turnover activity than in mid-2025.

The state-level data underscores where stress is most concentrated. Mississippi, Louisiana and Alabama had the highest non-current loan percentages, while Hawaii, California, Montana, Washington and Idaho had the lowest figures.

On a 12‑month basis, New York, Wyoming and Montana saw the biggest increases in non-current shares, while states such as Hawaii and Idaho posted some of the smallest gains.

“Overall mortgage performance remains healthy, yet the level of serious delinquencies and active foreclosures highlights the importance of reaching borrowers early,” Bob Hart, president of mortgage technology at ICE, said in the report. He noted that as loss-mitigation volumes rise, mortgage services will need technology that can scale borrower outreach and workout execution while supporting compliance.

For servicers, the divergence between stable headline performance and rising serious delinquencies and foreclosure inventories signals a growing pipeline of loss-mitigation work — particularly on Federal Housing Administration (FHA) loans, which ICE said continue to underperform the broader market. This means more staff time, compliance risk and operational complexity just as prepayment speeds remain low and cash flows stretch out.

Investors and mortgage servicing rights (MSR) holders should pay close attention to the mix of early‑stage versus late‑stage delinquencies. Calendar-driven bumps in 30‑day delinquencies are usually transitory, but sustained growth in 90‑day-plus delinquencies and active foreclosures can pressure advance requirements, increase credit losses, and change assumptions on bond and MSR valuations.

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