Mortgage Performance Holds Steady Despite Calendar-Driven Rise In Delinquencies
Intercontinental Exchange, Inc. (NYSE: ICE) released the May 2026 ICE First Look at mortgage performance trends. The analysis found that while overall mortgage delinquencies increased modestly in May, the rise was largely driven by calendar-related factors rather than broad-based deterioration in mortgage performance.
“While the headline increase in delinquencies may draw attention, the underlying performance picture is stable as delinquencies remain below January 2020 levels,” said Andy Walden, Head of Mortgage and Housing Market Research at ICE. “The rise in early-stage delinquencies and the month-over-month decline in cures were largely driven by the Sunday month-end, which causes many mortgage payments to be processed the following business day. The more important trend to watch remains the continued growth in serious delinquencies and active foreclosures, particularly among FHA loans.”
Key takeaways from the month include:
- The overall delinquency rate rose in May: The national delinquency rate rose 15 basis points (bps) to 3.50% due to a calendar anomaly. Overall delinquencies rose 4.5% month over month, which is in line with historical Sunday month-end patterns.
- Late-stage delinquencies improved to a five-month low: While serious delinquencies (90-plus days past due, but not in foreclosure) held steady from April and have improved seasonally from a five-month low, they are up 111,000 year over year — the largest annual increase since 2020.
- Foreclosure starts and inventory rose: Foreclosure starts fell 9% from April but remain 19% above year-ago levels. Active foreclosure inventory reached 280,000 loans, up 34% annually and the highest level in six years, though the foreclosure rate remains below pre-pandemic levels.
- Late-stage non-current loans rose: The number of loans that are seriously delinquent or in active foreclosure increased by 185,000 from a year ago, marking the largest year-over-year increase since the pandemic-era unemployment spike in 2020.
- Cure activity softened: Loans curing from serious delinquency declined 6% month over month in May, a decrease consistent with both typical seasonal patterns and the same month-end calendar effects that influenced delinquency counts. Cure volumes remain below late 2025 levels, with FHA cures continuing to lag broader market performance.
- Prepayment speeds cooled on higher rates: Single-month mortality (SMM), a measure of pre-payment speed, fell 15% from April’s 0.93% to 0.79% — a four-month low — as mortgage rates rose. May’s SMM remained 8 bps above year-ago levels.
“Overall mortgage performance remains healthy, yet the level of serious delinquencies and active foreclosures highlights the importance of reaching borrowers early,” said Bob Hart, President of Mortgage Technology at ICE. “As loss mitigation volumes increase, servicers need technology that helps them quickly connect with homeowners experiencing financial hardship, streamline workout decisions and support consistent execution of workout plans from first contact through resolution. ICE’s Loss Mitigation solution helps servicers scale those efforts while supporting compliance and improving outcomes for both homeowners and investors.”
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