TransUnion SVP sees loan recapture surge on the horizon
While consumer credit delinquencies, including student loans, continue to grow at a rapid rate, mortgage delinquencies haven’t seen the same rapid increase.
The latest numbers from TransUnion showed a continued steady increase in mortgage delinquencies in Q4 2025, but the delinquency rate is still below historic normal levels.
Mortgages that were 60 or more days past due reached 1.58% in Q4 2025, according to TransUnion. This was a 19-basis-point increase year over year, but still lower than Q4 2019, pre-pandemic, which saw a delinquency rate of 1.64%.
Satyan Merchant (pictured top), SVP of auto and mortgage business leader at TransUnion, said much of the increase can be attributed to FHA and VA loans, while agency loans seem to be performing well.
“We continue to see some increase in delinquency,” Merchant told Mortgage Professional America. “The key with delinquency and mortgage is that it's really about the loan type. The FHA program is designed for the lower-credit-score consumer. You would not be surprised to see an increase on that side. I think the agency loans seem to be operating just fine. That’s why I would really compare this delinquency picture of what we saw in 2008 and 2009.”
Loans generally performing well
Delinquency rates plummeted in the aftermath of the pandemic as lenders offered programs to help borrowers who were impacted stay current on mortgages. The current rate of delinquency seems to be another step in a return to normal, although Merchant said it can be tough to determine what that is.
“I think it's always hard to identify what is normal,” Merchant said. “It's never normal. But I think that probably a good contextual number is the 60-day delinquency rate between 2005 and 2019. The lowest in that time was 1.64%, and today we're below that.
“In the pandemic period, when consumers were flush with cash, with government assistance, where there were repayment programs and accommodations, delinquency rates got to less than 1%. I don't know what is normal, but I would be comfortable saying that was abnormal.”
While even a small increase in delinquencies isn’t necessarily good news, one encouraging sign Merchant sees is that recent loans seem to be performing well.
“When it comes to loan performance, we tend to look in every lending line at vintages to say which cohort of loans were kind of the trouble spots,” he said. “I think the good news is, the most recent cohort, the Q4 2024, has been on the books for about a year now. They're performing better than the 2023 and 2022 books. I think that speaks to lenders with their risk management, maybe also the state of the consumer.”
Preparing for recapture
While mortgage rates have come back up a bit this week, there is still a strong feeling in the mortgage industry that refinances will continue to increase in 2026.
Merchant said one of the biggest keys for brokers is to be ready to meet their customers when they are ready to make that move, whether it’s a refinance, an equity loan, or a purchase.
“It's understanding and being ready to again market and touch consumers at the time when the opportunity presents itself based on the market factors,” he said. “When rates drop, or when there's an offering that the lender has that could drive some demand and capture some customers for a broker or a lender, be ready to have your systems ready to do that outreach.”
The hard part in a fluctuating rate market is that the window to get to a customer when rates fall can be very short.
“If rates drop tomorrow, the time is now,” Merchant said. “It's a bit of a race to see who can provide the best value proposition to the consumers out there. You want to make sure they know it's you who's calling them. You want to make sure that you're presenting them with an offer that is relevant to them, meeting them at the right place, at the right time.
“I think what ends up happening is the market will see origination growth if rates drop. The question is, which lenders are capturing that opportunity? I think it comes back to how well you know your customer. Do you have the data of that customer, and are you reaching them in the right places?”
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