Late-stage delinquencies inched higher even as prices and rates showed signs of easing
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Housing affordability pressures already sidelined would‑be buyers. By the end of 2025, they were also catching up with existing homeowners, with more borrowers slipping into late‑stage mortgage trouble even as headline prices cooled and credit scores only nudged lower.
New research from VantageScore showed late‑stage mortgage delinquencies – loans at least 90 days past due – rising faster than other forms of consumer credit in December, even though they still represented only about 0.2% of outstanding mortgages, up from just under 0.17% a year earlier. That jump helped pull the average VantageScore down to 700, matching levels last seen in early 2023.
“Late‑stage mortgage delinquencies rose 18.6% in December from a year earlier,” said Rikard Bandebo, chief strategy officer and chief economist for VantageScore. “This is a considerably lower delinquency rate than during the financial crisis. But it’s still a concerning sign that [delinquencies] are increasing.”
Consumer‑credit specialists also pointed to the broader deterioration in repayment behavior. “The greater concern is moving from one credit tier to another, such as shifting from prime to nearprime,” said Aleksandar Tomic, associate dean at Boston College.
“A lower credit tier can increase the challenge of obtaining credit and make borrowing more costly with higher rates.”
April Lewis‑Parks, director of financial education at Consolidated Credit, said sliding into lower tiers often reflected deeper strain. “They’re not paying bills on time, and they’re likely using credit cards to make ends meet,” she said. “That’s unsustainable for them and costly to the larger economy.”
Affordability crunch reaches existing homeowners
The affordability backdrop remained harsh. From January 2020 through late 2025, US home prices climbed more than 50% while overall consumer prices jumped roughly 25%, even as 30‑year mortgage rates hovered in the 6% range.
A recent Realtor.com analysis found that returning to pre‑pandemic affordability – when typical mortgage payments used about 21% of median income rather than more than 30% – would require either a drop in rates toward the mid‑2% range, a more than 50% jump in incomes, or a roughly one‑third decline in prices.
For many households already in homes, rising insurance premiums, property taxes and maintenance only added to monthly burdens.
How this fits into a shifting market narrative
The latest delinquency uptick arrived just as some industry data suggested gradual relief on the affordability front. First American’s Real House Price Index showed real‑world affordability improving through much of 2025, with chief economist Mark Fleming saying that income growth is finally expected to outpace house‑price gains in 2026.
The overall delinquency rate remains historically low and far below the financial‑crisis peak, but more borrowers are starting to fall behind just as policymakers debate new affordability measures and as originators search for volume in a still‑tight market.
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