Mortgage Delinquency, Foreclosure, and Prepayment Trends Show Modest Shifts, But Overall Conditions Remain Stable

At a Glance:

• More borrowers are behind on mortgages, but overall delinquency levels remain low: The national mortgage delinquency rate rose 7 basis points in February to 3.72%, but remains below pre pandemic levels.¹
• Foreclosure activity eased month over month, though year over year levels are modestly higher: Foreclosure starts declined 16% from January, though they are 7% higher than a year ago.²
• Borrowers are paying off mortgages at a higher rate than last year: Prepayment activity increased, with prepayment speed rising to 0.82%, up significantly from last year.³

As the spring homebuying season begins, mortgage performance data provides helpful insight into how borrowers are managing today’s economic conditions. Trends in delinquencies, foreclosures, and prepayments reflect the ongoing impact of higher interest rates, affordability pressures, and shifting market dynamics.

In this edition of Ameris Bank’s Mortgage Monitor, we review the latest national mortgage data alongside current housing and rate trends shaping the early spring market.

Delinquency Rates Increased

In February, the national mortgage delinquency rate increased slightly, rising 7 basis points to 3.72%.⁴ The increase was driven by a rise in both early-stage (30-day) delinquencies and loans that are 90 or more days past due.⁵

“While more homeowners fell behind on payments in February, delinquency levels remain below where they were before the pandemic,” said Brett Hively, Senior Vice President, Mortgage Capital Markets and Financial Strategist at Ameris Bank.

Overall, the delinquency rate is still 12 basis points lower than it was in February 2020.⁶

Foreclosure Starts Declined

There were approximately 35,000 foreclosure starts nationwide in February.⁷ This marks a 16% decline from January, signaling fewer new foreclosure actions during the month.⁸

“The monthly decline suggests fewer borrowers entered foreclosure compared to January,” Hively said. “However, the broader trend over the past year has moved modestly higher.”

Compared to February 2025, foreclosure starts were up 7%, reflecting a gradual normalization of foreclosure activity.⁹

Prepayment Activity Rebounded

Prepayment activity increased in February, with the single-month mortality (SMM) rate rising to 0.82%.¹⁰ That level is roughly 80% higher than it was a year ago.

“Lower mortgage rates earlier in February created limited refinance opportunities, especially for borrowers who originated loans at higher rates,” Hively noted.

He added that recent global developments could affect prepayment trends in the months ahead. “Geopolitical tensions and inflation concerns have contributed to higher interest rates, which may reduce the incentive for refinancing activity moving forward.”

Spring 2026 Forecast

Mortgage rates started the year in the low 6% range and briefly dipped below 6% in mid-February.¹¹ Since then, rates have moved higher, reaching a peak in March before settling near 6.27% as of early April.¹² ¹³

While higher rates continue to affect affordability, some housing trends may help offset those challenges. Active housing inventory is up 5.6% from a year ago, giving buyers more options.¹⁴

“Increased inventory can ease some of the competitive pressure seen in recent years,” Hively said. “Buyers may have more flexibility as they navigate today’s market.”

In addition, the average list price is down 2.3% year over year.¹⁵ “Even modest price declines can make a difference when combined with a greater selection of homes,” Hively added.


Sources:
^{1, 2, 3, 4, 5, 6, 7, 8, 9, 10} https://mortgagetech.ice.com/resources/data-reports/first-look-at-february-2026-mortgage-data
^{11, 12, 13} https://www2.optimalblue.com/obmmi
^{14, 15} https://www.realtor.com/news/trends/inventory-iran-war-weekly-housing-trends-march-19-2026/

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Ameris Bank does not endorse nor is affiliated with the companies listed in this article.