Rising Housing Costs Are Pushing More Homeowners Behind on Mortgage Payments

Housing affordability problems are no longer limited to people trying to buy a home. New data shows that a growing number of current homeowners are also feeling the strain, with more falling behind on their mortgage payments.

Fresh research from credit scoring firm VantageScore shows that late-stage mortgage delinquencies defined as payments that are at least 90 days past due rose 18.6% in December compared with a year earlier. While the overall share of severely delinquent mortgages remains low, the pace of increase is raising concern among economists.

Currently, about 0.2% of mortgages are at least three months behind on payments, up from just under 0.17% one year ago. Even though that number is small, the growth rate is faster than what’s being seen for other types of consumer debt, such as credit cards, auto loans, and personal loans.

Delinquencies Are Rising Faster Than Other Debt Types

VantageScore leaders say the trend stands out because mortgage payments are usually the last bill households stop paying.

Compared with the housing crash of 2008 to 2010, today’s delinquency levels are far lower. Back then, more than 11% of mortgages were delinquent at the peak. Still, experts warn that the recent increase should not be ignored, especially in an environment where housing costs remain high.

Federal Reserve data shows that by the third quarter of last year, 1.78% of all mortgages were delinquent at some stage, up slightly from the year before.

Millions of Loans May Be Affected

Based on national mortgage balances and delinquency rates, estimates suggest that around 1.5 million mortgages may currently be behind on payments in some form.

The rise in missed payments has already started to show up in consumer credit data. The average VantageScore credit score slipped to 700 in December, down from both the prior month and the previous year.

This decline reflects broader financial pressure on households, as many continue to deal with higher prices across everyday expenses.

Higher Costs Are Squeezing Household Budgets

Since early 2020, the cost of common goods and services has risen by more than 25%, according to inflation data. Housing costs remain one of the largest pain points.

Even though mortgage rates have eased slightly from their peak, home prices remain high. The median price of a single-family home was about $409,500 in December, only modestly lower than last year’s high and far above pre-pandemic levels.

Over the five years following January 2020, national home prices jumped more than 54%, making ownership more expensive even for those who already bought.

What It Would Take to Restore Affordability

A recent housing affordability study explored what would be needed to return conditions to pre-pandemic norms, when mortgage payments typically used about 21% of household income. Today, that figure is closer to 30%.

According to the analysis, affordability would improve only if one of three major changes happened:

• Mortgage rates fall to around 2.65%
• Median household income rises by about 56%
• Home prices drop roughly 35%

None of these shifts appear likely in the near term, keeping pressure on both buyers and current homeowners.

Experts Urge Caution for Buyers and Owners

Financial planners say rising delinquencies should serve as a warning, especially for buyers stretching their budgets.

Just because a lender approves a large loan does not mean it’s comfortable or safe over time. Mortgage payments should leave room for savings, daily expenses, and unexpected costs.

A common guideline is to keep total housing costs—including taxes and insurance—below 28% of income, though some advisors recommend aiming even lower.

Plan for Maintenance and Emergencies

One often overlooked cost of homeownership is upkeep. Experts suggest setting aside 1% to 2% of a home’s value each year for repairs and maintenance.

Emergency savings are just as important. Having three to six months of expenses set aside can make a big difference if income drops or surprise costs show up, especially in the first year of ownership.

Bottom Line

Mortgage delinquencies are still low by historical standards, but the upward trend shows that housing affordability remains a serious issue. With home prices high and household budgets stretched, both buyers and current homeowners need to plan carefully to avoid financial stress in 2026 and beyond. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.