ICE data showed December as a split-screen moment for US mortgage risk
Refinance borrowers rushed back to the market in December even as serious distress continued to build at the edges of the mortgage system, particularly among FHA and VA borrowers, according to new ICE Mortgage Technology data.
The firm’s latest First Look report put the national delinquency rate at 3.68%, down 16 basis points from November’s calendar-driven spike and 26 basis points below the pre‑pandemic level recorded in December 2019.
Yet loans 90 days or more past due rose by 30,000 to 560,000, the highest level in nearly three years, and foreclosure starts climbed to 40,000, the third‑highest monthly reading of 2025.
Refinance window reopened as rates eased
Lower rates turned 2025’s final quarter into one of the most active refi windows since before the Fed tightening cycle.
ICE said the single‑month mortality prepayment rate rose to 0.91% in December, just below October’s 3.5‑year high.
“December’s numbers show that lower interest rates drove refinance activity and prepayments to near multi‑year highs,” Andy Walden, head of mortgage and housing market research at ICE, said.
“At the same time, there was a divergence in delinquency trends, with early‑stage delinquencies improving and late‑stage delinquencies continuing to rise. Foreclosure activity also increased, driven mainly by FHA and VA loans.”
In a separate analysis last fall, he said affordability reached a 2.5‑year high, creating “more opportunities for homeowners to lower their monthly payments with a rate‑and‑term refinance loan.”
Late-stage stress concentrated in government loans
Even as headline delinquencies eased in December, stress among government borrowers appeared to deepen.
ICE reported that loans in active foreclosure rose to their highest level since early 2023, with FHA foreclosures up 59% year over year and VA activity resuming after last year’s moratorium.
Meanwhile, data from Mortgage Bankers Association showed that total delinquency rate for FHA loans was at 10.78% in the third quarter of 2025, far above the 2.62% rate for conventional loans.
The Office of the Comptroller of the Currency reported that 97.4% of first‑lien mortgages in the federal banking system were current at the end of the third quarter, but the seriously delinquent share edged up to 1.1%, and new foreclosures increased quarter over quarter.
Separate ICE statistics indicated that FHA loans, though only around 15% of active mortgages, accounted for nearly half of foreclosure starts by late 2025, a concentration that may signal mounting affordability strain among first‑time and lower‑income buyers.
From calendar noise to underlying risk
November’s jump in the national delinquency rate to 3.85% largely reflected a Sunday month‑end that delayed payment processing, not a sudden deterioration in borrower health.
December’s pullback in overall delinquencies appears to confirm that view, but the rise in 90‑day‑plus delinquencies and the 25% year‑over‑year increase in foreclosure inventory point to gradually accumulating stress beneath the surface.
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