MBA: Mortgage Delinquencies Increased in Q1 2026

Key Takeaways

• Delinquency rate rose to 4.44% in Q1 2026, up 18 bps QoQ.
• FHA loan delinquency spread 900 bps above conventional, widest since 2021.
• VA loan delinquency spread 225 bps above conventional, also at 2021 high.
• FHA foreclosure rate reached highest level since Q4 2018.
• Expiration of pandemic-era FHA relief in Sep 2025 fuels higher delinquencies.

Pulse Analysis

The Mortgage Bankers Association’s latest National Delinquency Survey shows the overall mortgage delinquency rate edging above pre‑pandemic norms at 4.44% in the first quarter of 2026. While the increase of 18 basis points from Q4 2025 may appear modest, it marks a 40‑basis‑point rise from a year earlier, indicating that the market’s recovery from the COVID‑19 shock is losing momentum. Lenders are now contending with a broader pool of overdue loans, which can strain liquidity and heighten provisioning requirements, especially as interest rates remain elevated.

Government‑backed loan programs are bearing the brunt of the deterioration. FHA delinquency levels sit roughly 900 basis points above conventional loans, the widest spread since 2021, while VA loans trail by about 225 basis points. The surge is linked to the September 2025 expiration of pandemic‑era FHA forbearance options and the introduction of trial payment plans that keep borrowers classified as delinquent until a permanent workout is secured. Meanwhile, veterans await final guidance on the VA partial‑claim program, a critical tool designed to cover missed payments and stave off foreclosure. The heightened foreclosure inventory—FHA’s highest since Q4 2018 and VA’s since Q2 2017—underscores the urgency of policy interventions.

For investors and mortgage servicers, these data points raise red flags about credit quality and future cash‑flow volatility. Higher delinquency and foreclosure rates can depress the value of mortgage‑backed securities and trigger tighter underwriting standards. Lenders may respond by tightening credit criteria, increasing loan‑level price adjustments, or expanding loss‑mitigation resources. Policymakers, meanwhile, face pressure to accelerate relief mechanisms for FHA and VA borrowers to prevent a broader wave of defaults that could ripple through the housing market. Monitoring the trajectory of these government‑insured segments will be essential for forecasting mortgage market health throughout 2026.