The US mortgage market saw an increase in debt balances and delinquency rates in the second quarter of 2025, according to a report by the New York Fed’s Center for Microeconomic Data. The total outstanding mortgage balances stood at $12.94 trillion, with government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac dominating the market.
Mortgage delinquency rates have risen modestly overall, but when split by underlying investor types, substantial heterogeneity is observed. FHA loans, which are designed for first-time and lower-income buyers, have historically had higher delinquency rates and recently saw a significant rise in delinquencies.
As of June 2025, total outstanding mortgage balances comprised of GSE loans accounted for around 52% ($6.5 trillion), government-backed loans made up 19% ($2.5 trillion), FHA loans accounted for 12% ($1.48 trillion), and VA loans accounted for 8%. The more recent cross-section of “other” loans was predominantly portfolio loans, particularly jumbo loans that cannot be sold to the GSEs.
Mortgage delinquency rates have risen among FHA borrowers, with transitions into 30 days past due exceeding 4% quarterly. In contrast, GSE loans make up over half of all mortgage debt but less than a quarter of delinquent mortgages. FHA loans, however, make up 38% of 30+ day delinquent balances despite constituting only 12% of total balances.
The quality of newly originated mortgages remains solid, with average credit scores near historical highs. Credit scores at origination for GSE and other loans are the highest, while FHA loans have average credit scores around 700, which is near long-term highs.
Geographic concentrations of loans indicate that a higher proportion of mortgage balances are delinquent in southern states and Puerto Rico. Notably, about 20% of mortgage balances in Oklahoma, Mississippi, and Puerto Rico are FHA loans, almost double the national average of 11%.
The analysis concludes that while home prices have only declined slightly, there is some risk that a continued decline in home prices may add pressure on borrowers. Further research is needed to monitor this important market.
Written by: Andrew F. Haughwout, Donghoon Lee, Jonathan Lee, Joelle Scally, and Wilbert van der Klaauw
Source: https://libertystreeteconomics.newyorkfed.org/2025/08/a-check-in-on-the-mortgage-market