ICE First Look at Mortgage Performance: Increased Refinance Activity Drives Mortgage Prepayments Back Toward 3.5-Year High
MWN-AI** Summary
In its December 2025 report on mortgage performance, ICE Mortgage Technology revealed significant trends regarding delinquencies, foreclosures, and prepayment activity. The report highlights a rise in refinancing as lower interest rates have spurred prepayments to approach a 3.5-year high. Andy Walden, Head of Mortgage and Housing Market Research, noted that while early-stage delinquencies improved, late-stage delinquencies rose, pointing to a divergence in the overall delinquency landscape.
Key findings include a decrease in the national delinquency rate by 16 basis points (bps) to 3.68%, marking a 3 bps drop from the previous year and also lower than pre-pandemic levels. However, late-stage delinquencies (90+ days) reached their highest point in nearly three years, increasing by 30,000 to 560,000 properties. The single-month mortality (SMM) rate for prepayments rose by 8 bps to 0.91%, just shy of the October high, signaling a robust refinance activity fueled by improved affordability.
Additionally, foreclosure activity has been trending upward, with 40,000 foreclosure starts in December, up 28% year-over-year, and foreclosure inventory growing by 25%. Government loans, particularly FHA and VA loans, are indicated as driving this growth. Though there is a notable rise in foreclosures, the overall activity remains muted compared to historical standards.
In summary, the current mortgage environment reflects increased refinance activity amid falling interest rates, yet a concerning rise in late-stage delinquencies and foreclosures, particularly among government-backed loans. These trends underscore dynamic shifts in the housing finance landscape as the market adjusts to changing economic conditions.
MWN-AI** Analysis
The recent release of the ICE First Look at Mortgage Performance highlights significant shifts in the mortgage landscape as of December 2025. With refinance activity surging due to lower interest rates, prepayments nearly reached a 3.5-year high, posing both opportunities and challenges for investors and market participants.
The data indicates that early-stage delinquencies improved, with the national delinquency rate dropping to 3.68%, yet this masks underlying issues as late-stage delinquencies soared to their highest levels since 2023. Foreclosure activity is also trending upward, primarily driven by FHA and VA loans. This duality in delinquency rates signifies a bifurcated market; while refinancing and prepayment improvements offer avenues for profitability, the rise in late-stage delinquencies suggests increasing financial strain among certain borrower segments.
For investors, the heightened refinancing activity suggests a positive outlook for mortgage-backed securities (MBS) as lower interest rates typically enhance performance. However, the increased foreclosure starts—up 28% year-over-year—should prompt caution. Investors should assess the MBS portfolios for potential impacts from higher default risks associated with government loan types, which are experiencing a notable increase in foreclosures.
Regions showing the highest delinquency rates, such as Louisiana and Mississippi, warrant particular attention for investors considering localized risk exposure. Furthermore, states like Florida, which have shown decreasing non-current percentages, could represent safer investment landscapes.
In summary, while the current environment presents favorable refinancing incentives, the rising tide of delinquencies and foreclosures presents inherent risks. A balanced approach, considering both opportunities in refinance and caution around late-stage delinquencies, will be crucial in navigating the evolving mortgage market landscape.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
ICE Mortgage Technology, neutral provider of a robust end-to-end mortgage platform and part of Intercontinental Exchange, Inc. (NYSE: ICE), today released the December 2025 ICE First Look at mortgage delinquency, foreclosure and prepayment trends.
“December’s numbers show that lower interest rates drove refinance activity and prepayments to near multi-year highs,” said Andy Walden, Head of Mortgage and Housing Market Research at ICE. “At the same time, there was a divergence in delinquency trends, with early-stage delinquencies improving and late-stage delinquencies continuing to rise. Foreclosure activity also increased, driven mainly by FHA and VA loans.”
Key takeaways from this month’s findings include:
- Early-stage delinquencies improved: The national delinquency rate fell by 16 basis points (bps) in December to 3.68% following November’s calendar related high. This is down 3 bps from the same time last year and 26 bps below the December 2019 pre-pandemic benchmark.
- Late-stage delinquencies reached a near two-year high: While earlier-stage delinquencies (30- and 60-day) improved in December, late-stage delinquencies (90+ day) increased by 30,000, reaching their highest level in nearly three years and standing 19,000 above last year’s level.
- Prepayments remain robust: The single month mortality (SMM) rate, which tracks prepayments, rose by 8 bps in December to 0.91%, just 10 bps shy of the October 3.5-year high. Lower interest rates have improved affordability and spurred refinance activity.
- Foreclosure activity trending upward: December’s 40,000 foreclosure starts marks the third highest monthly volume in 2025, up 28% from the year before. Foreclosure inventory is up by 47,000 (+25%) year over year, and foreclosure sales have increased by 2,100 (+41%) from last year's levels.
- Government loans driving foreclosure growth: While foreclosure activity remains muted by historical standards, the number of loans in active foreclosure again hit its highest level since early 2023, driven by a notable rise in FHA foreclosures (+59% YoY) along with a resumption of VA activity following last year's moratorium.
Data as of December 31, 2025
Total U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure): 3.68%
Month-over-month change: -4.20%
Year-over-year change: -0.93%
Total U.S. foreclosure pre-sale inventory rate: 0.44%
Month-over-month change: 5.71%
Year-over-year change: 22.86%
Total U.S. foreclosure starts: 40,000
Month-over-month change 53.96%
Year-over-year change: 27.74%
Monthly prepayment rate (SMM): 0.91%
Month-over-month change: 9.92%
Year-over-year change: 59.15%
Foreclosure sales: 7,100
Month-over-month change: 6.68%
Year-over-year change: 40.77%
Number of properties that are 30 or more days past due, but not in foreclosure: 2,025,000
Month-over-month change: -89,000
Year-over-year change: 9,000
Number of properties that are 90 or more days past due, but not in foreclosure: 560,000
Month-over-month change: 30,000
Year-over-year change: 19,000
Number of properties in foreclosure pre-sale inventory: 239,000
Month-over-month change: 13,000
Year-over-year change: 47,000
Number of properties that are 30 or more days past due or in foreclosure: 2,265,000
Month-over-month change: -76,000
Year-over-year change: 56,000
Top 5 States by Non-Current* Percentage | |
Louisiana: | 8.58% |
Mississippi: | 8.37% |
Alabama: | 6.36% |
Arkansas: | 6.03% |
Indiana: | 5.96% |
Bottom 5 States by Non-Current* Percentage | |
California: | 2.35% |
Colorado: | 2.30% |
Montana: | 2.26% |
Washington: | 2.16% |
Idaho: | 2.11% |
Top 5 States by 90+ Days Delinquent Percentage | |
Mississippi: | 2.41% |
Louisiana: | 2.26% |
Alabama: | 1.82% |
Arkansas: | 1.62% |
Georgia: | 1.54% |
Top 5 States by 12-Month Change in Non-Current* Percentage | |
Florida: | -8.78% |
Hawaii: | -5.78% |
South Carolina: | -5.48% |
New York: | -4.87% |
North Carolina: | -3.52% |
Bottom 5 States by 12-Month Change in Non-Current* Percentage | |
Maryland: | 10.63% |
Utah: | 9.40% |
Arizona: | 8.45% |
Alaska: | 8.36% |
Arkansas: | 8.25% |
*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.
Notes:
- Totals are extrapolated based on ICE’s loan-level database of mortgage assets.
- All whole numbers are rounded to the nearest thousand, except foreclosure starts and sales, which are rounded to the nearest hundred.
The company will provide a more in-depth review of this data in its monthly Mortgage Monitor report, which includes an analysis of data supplemented by detailed charts and graphs that reflect trend and point-in-time observations. The Mortgage Monitor report is available online at https://www.icemortgagetechnology.com/resources/data-reports .
For more information about gaining access to ICE’s loan-level database, please send an email to ICE-MortgageMonitor@ice.com.
About Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds and operates digital networks that connect people to opportunity. We provide financial technology and data services across major asset classes helping our customers access mission-critical workflow tools that increase transparency and efficiency. ICE’s futures, equity, and options exchanges – including the New York Stock Exchange – and clearing houses help people invest, raise capital and manage risk. We offer some of the world’s largest markets to trade and clear energy and environmental products. Our fixed income, data services and execution capabilities provide information, analytics and platforms that help our customers streamline processes and capitalize on opportunities. At ICE Mortgage Technology , we are transforming U.S. housing finance, from initial consumer engagement through loan production, closing, registration and the long-term servicing relationship. Together, ICE transforms, streamlines and automates industries to connect our customers to opportunity.
Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located here . Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key Information Documents (KIDS).”
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 – Statements in this press release regarding ICE's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in ICE's Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 6, 2025.
Category: Mortgage Technology
Source: Intercontinental Exchange
View source version on businesswire.com: https://www.businesswire.com/news/home/20260126881841/en/
ICE Media Contact
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FAQ**
How is Intercontinental Exchange Inc. ICE addressing the rising late-stage delinquency rates, particularly concerning FHA and VA loans, as indicated in their December 2025 report?
With the significant increase in foreclosure activity reported by Intercontinental Exchange Inc. ICE, what strategies are being implemented to mitigate potential risks in the housing market?
Given the robust prepayment rates highlighted by Intercontinental Exchange Inc. ICE, how might this trend affect future mortgage origination and refinancing markets?
How does Intercontinental Exchange Inc. ICE plan to leverage its mortgage technology platform to improve overall loan performance amid the divergent delinquency trends observed in the recent report?
**MWN-AI FAQ is based on asking OpenAI questions about Intercontinental Exchange Inc. (NYSE: ICE).
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