What brokers need to know about a recent credit study that could predict future mortgage delinquency
Despite reports that consumer debt delinquencies have been on the rise, this trend hasn’t been reflected in mortgage delinquencies, which remain very low by comparison.
However, mortgage delinquencies are starting to rise as household budgets feel the squeeze of rising consumer debt and inflation. One credit bureau decided to see if it could find a correlation between the increasing burden and the likelihood of future mortgage delinquency.
TransUnion released the results of its survey on Thursday, which was conducted among 57 million mortgage customers. The results showed a direct correlation between a rise in consumer payment-to-income (PTI) ratios and future mortgage delinquency.
The company’s PTI metric compares a borrower’s monthly debt obligation to their gross monthly income. Satyan Merchant (pictured top), SVP of auto and mortgage business leader at TransUnion, said it was essential to identify a leading indicator that could alert lenders and brokers to potential future mortgage trouble.
“The reason we even looked at this topic, which is mortgage delinquencies, is really because nobody else has been looking at it for a while,” Merchant told Mortgage Professional America. “Mortgage delinquencies are still relatively low, and that's a good thing in the market. But we were at all-time lows not that long ago. We always want to keep an eye on the data and get ahead of the trend.”
Canary in the coal mine
The data compared the PTI of borrowers to mortgage delinquencies of the same borrower one year later. In March 2023, the PTI index was 2.18. By December, it had risen to 2.33. In March 2024, borrowers reaching 60 days past due (DPD) were 0.42%. By December 2024, that was up to 0.63%.
Again, the percentage of borrowers reaching 60 DPD was still very low. However, as household payments rose, that eventually affected the ability to make mortgage payments on time.
“Mortgage delinquencies have been ticking up in the last year or two,” Merchant said. “We wanted to see if there was any signal that we can find as an early warning sign, or canary in the coal mine in this current cycle. We honed in on the PTI metrics, not just for the mortgage itself, but PTI, across the wallet, which are the other different types of loan products that a consumer might have.
Merchant said the time period they looked at was interesting because it was a time that corresponded with increased inflation and increases in home insurance and property taxes. All of those factors began to weigh on household budgets.
“From a macro perspective, 23 and 24 were years where inflation was increasing,” he said. “There were a lot of variations, just the macro in general, with interest rates and other aspects that factor into metrics like insurance and taxes on a mortgage. There were three product types, specifically in a consumer's wallet: their bank card or credit card balances, the home equity line of credit, which is a revolving product, and student loans.
“What we found is that as the payments on those products specifically increased, it was highly correlated with mortgage delinquency. The second one is the mortgage payment. As that went up, delinquency also went up. The principal and interest are fixed. So we would assume that's related largely to insurance and taxes.”
Student loans stress
One concern that credit professionals are monitoring is the rise in student loan delinquency, and whether it could be an early indicator of mortgage delinquency.
Many loans have been either in deferment since the pandemic or in affordable repayment plans. Many of those plans have now been ended by the current administration, which has seen student loan delinquencies skyrocket, causing credit scores to plummet.
According to the Federal Reserve Bank of New York, nearly one in five student loan borrowers aged 50 or older became seriously delinquent, or 90 or more days past due, in the second quarter of 2025.
Some of the trends that might lead to mortgage delinquency were revealed in the TransUnion survey, according to Merchant.
Kristi Hardy, an executive vice president at Atlantic Coast Mortgage, notes that many homeowners in the Washington, DC area are fearful of job loss. https://t.co/sAnYdCDLe5
— Mortgage Professional America Magazine (@MPAMagazineUS) August 12, 2025
“Once student loans started to be due, the consumer who went delinquent, their monthly payment jumped higher, and it jumped more dramatically,” Merchant said. “In Q3 2023, it was basically a new obligation that a consumer had. The ones who went delinquent had a nearly $100 monthly payment jump. The ones who didn't go delinquent had only about a $72 jump.
“If there's a jump, especially in student loans, home equity, HELOC payments or credit card payments, it's very much correlated to what could end up happening for that consumer who needs to make their mortgage payment. The consumer might go delinquent on a mortgage payment.”
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