Foreclosures have climbed in 2025, and experts warn rate cuts may not offer relief
Foreclosure activity continued to climb across the United States in 2025 – and while the Federal Reserve appears to have pivoted to rate-cutting mode, experts are warning that won't necessarily improve the picture significantly for debt-laden borrowers.
According to property data firm ATTOM, foreclosure filings in August marked the sixth consecutive year-over-year increase, up 18% from the same period in 2024. Through June, roughly 188,000 properties had received foreclosure filings, putting the nation on track to surpass last year’s total of 322,000.
In August alone, lenders initiated foreclosure proceedings on 35,697 properties, a slight 1.1% dip from July but an 18.1% jump compared to August 2024.
The Federal Reserve's decision to lower its funds rate by 25 basis points last month sparked some relief and fresh hopes of a brighter borrowing outlook. But rising foreclosures have prompted industry leaders to question whether the central bank's anticipated rate cuts will provide any real relief for the real estate market.
Glen Weinberg, managing partner at Fairview Commercial Lending, cautioned that the link between Fed policy and mortgage rates is often misunderstood.
“There’s this market perception that the Fed controls mortgage rates. The Fed does not control mortgage rates. The Fed merely sets short term rates. The market controls longer rates. So I think it’s really important to have that distinction, because when we saw before in the last meeting, the Fed cut rates, and yet mortgage rates didn’t really move much,” he told Mortgage Professional America.
Sun West’s CEO Pavan Agarwal warns that without clear Fed action on QE, predictions are a “complete crap shoot,” and brokers shouldn’t stall good refinance opportunities in hopes of lower rates.https://t.co/xEylZHpHTE
— Mortgage Professional America Magazine (@MPAMagazineUS) September 22, 2025
Weinberg pointed to inflationary pressures, deficit spending, and other macroeconomic factors as reasons why mortgage rates have remained stubbornly high. Weinberg added that even with gradual rate cuts, mortgage rates are likely to remain elevated.
"My personal opinion is that the Federal Reserve is going to gradually cut rates, but we're going to see mortgage rates kind of kick around in that 6.5% to 7.25% range through the end of the year. I don't see a huge movement in rates - which is also going to impact foreclosures because the market has this perception that the Federal Reserve is going to bail real estate out, and the Federal Reserve can't.
"Regardless of how much they cut rates, because of inflation and market expectations, mortgage rates are going to stay high - which is going to continue to impact the real estate market."
The good news:foreclosures may be on the up, but they remain mired well below pre-pandemic lows. That suggests they still have some way to climb before the situation deteriorates into a full-blown crisis.
Still, mortgage market watchers will be closely watching their worrying rise in several key states. California, Texas, and Florida see some of the highest foreclosure volumes, with Nevada leading at one in every 2,069 homes, according to ATTOM. Nationally, one in every 3,987 housing units faced a foreclosure filing.
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