The first-quarter reading
The Mortgage Bankers Association reported a seasonally adjusted delinquency rate of 4.44 percent of all outstanding one-to-four-unit residential mortgages at the end of the first quarter of 2026, an increase of roughly 18 basis points from the fourth quarter of 2025. The release was published in mid-May.
The survey's delinquency rate counts loans at least one payment past due but excludes loans in the process of foreclosure, which are reported separately. Foreclosure starts were about 0.24 percent of loans — a level still low by any historical standard.
Why the gap between delinquency and foreclosure matters
A rising delinquency rate with flat foreclosure starts describes borrowers missing payments but not losing homes. Two structural features explain much of that gap in 2026. The first is equity: households that bought before 2022 hold substantial accumulated equity and can generally sell rather than default. The second is servicing practice, where loss-mitigation options developed after 2020 keep a larger share of delinquent loans in workout.
That buffer is not evenly distributed. Delinquency concentrates in more recent vintages and in government-insured products, where down payments are smaller and equity cushions thinner.
Product-level differences
MBA breaks the survey out by loan type, and the spread is wide: conventional loans run in the low single digits while FHA loans run several times higher. Reading a single national rate without that split conceals most of what is happening in the data.
Analysis: an 18 basis-point quarterly move is small in absolute terms and consistent with normalisation from unusually low post-pandemic levels rather than with distress. The signal to watch is not the headline rate but whether the foreclosure-start rate begins to track it upward, which through the first quarter it had not.
Survey caveats
The National Delinquency Survey is based on a sample of servicers covering a large majority of first-lien mortgages, and figures are revised as coverage changes. It is a proprietary MBA product; only summary figures are published.
Seasonal adjustment matters here too. First quarters routinely show payment stress following the fourth-quarter holiday period, which is why the adjusted figure rather than the raw one is the comparable series.
Government lending drove the increase
The first-quarter overall rate of 4.44 percent was 18 basis points above the fourth quarter and 40 basis points above a year earlier, while foreclosure starts rose four basis points to 0.24 percent.
The composition is where the movement sits. The FHA delinquency rate ran roughly 900 basis points above the conventional rate, the widest spread since 2021, and the VA rate roughly 225 basis points above conventional. FHA foreclosure inventory reached its highest level since the fourth quarter of 2018 and the VA rate its highest since the second quarter of 2017.
Two program changes affect comparability rather than borrower behaviour: pandemic-era FHA relief options expired at the end of September 2025, and FHA revised its trial payment plan rules. Both alter how a struggling loan is classified and when it exits delinquency, which means part of the year-over-year increase reflects a changed measurement environment rather than a changed economy.