Intercontinental Exchange Inc.’s (ICE) housing and mortgage market research leaders unpacked shifts in mortgage performance, foreclosure activity, interest rates, lending volumes, inventory, and home prices in the company’s August Monthly Mortgage Monitor discussion, offering a deep dive into the latest trends and data.
Delinquencies and Foreclosures Are Climbing, Led by FHA Loans
June brought the largest single-month mid-year increase in delinquency rates since 2007 — up nearly 5% month-over-month. While the year-over-year rate dipped slightly (due to a 2024 calendar quirk), the monthly move was significant.
“That’s not great company to be in. You never really like to compare yourself to 2007 timeframes in the mortgage industry,” said ICE Vice President of Research and Analysis Andy Walden.
Federal Housing Administration (FHA) mortgages remain the focal point, with the non-current rate up 25 basis points YoY and delinquencies up 41 basis points, the highest June reading since 2013. Over half of all seriously delinquent loans in the U.S. are in FHA loans.
Foreclosure metrics are trending up: starts (+37% YoY), sales (+18%), and active inventory (+10%) now total 208,000 loans in foreclosure — though that is still 30% below pre-pandemic levels. FHA foreclosures rose 30% YoY despite robust loss mitigation. VA foreclosures jumped 61%, largely due to the end of a moratorium in January.
Mortgage Rates Hold Steady, But Poised to Ease
Rates have been locked between 6.5% and 7% since last October. But the August 1 BLS employment report shifted sentiment:
“The market expectation for a September [interest rate] cut [from the Federal Reserve] was at a 90% probability as of yesterday,” noted ICE’s Manager of Housing Market Research Gunnar Blix, adding that futures suggest mortgage rates could drop to “near 6.3% by January — the most favorable six-month outlook for mortgage rates that we’ve seen in four months.”
Q2 Lending Saw Modest Uptick
Q2 2025 saw the largest quarterly lending volume since late 2022, driven by purchase activity and a small rise in rate-term refinances.
“We quietly saw lending have its best quarter since 2022,” Walden said, though he stressed that levels remain “relatively low from a historical perspective.”
The number of “in-the-money” refinance candidates rose from 1.3M in spring to 2M in early August. If rates dip below 6.25%, eligibility could jump sharply, unlocking ~5.6 million refi candidates.
Borrower Retention Challenges Intensify
Overall retention hit its lowest level since Q2 2024, even as volumes improved. Cash-out refinances — now 60% of refi volume — saw their weakest retention in four years.
“Those borrowers that took out a loan with you last year ... you lost half of them to the competition,” Walden said, underscoring the need for better portfolio engagement.
Notably, many cash-out borrowers (average credit score 719) are raising their mortgage rate by ~1.5 percentage points and adding ~$94K in debt, he pointed out, often coming from low-rate vintages like 2020–2022.
Purchase Activity Up 26 Straight Weeks Year-over-Year
Mortgage purchase applications have run 13-25% higher YoY since May.
“We’ve now seen 26 consecutive weeks of year-over-year increases in purchase applications,” Blix said, crediting “modestly lower mortgage rates and better inventory” compared to last year.
Yet seasonal headwinds loom as comparisons shift to last fall’s brief sub-6.25% rate window.
Inventory Gains Are Stalling, With Regional Divergence
Active listings in July were 13% below pre-pandemic norms, and improvement in that arena has flattened.
“The good news is that we’ve been on a relatively steady trajectory towards parity since mid-2023,” Blix said. “The bad news is that over the last two months, that improvement has slowed and has potentially started to turn.”
More than a third of major markets saw inventory declines recently, especially surplus markets like Denver (-27%), San Francisco (-20%), and Austin, Texas (-9%).
Home Price Growth Cooling; Condos Under Pressure
Annual national price growth slowed considerably to +1.0% in July, down from 3.6% in January. Seasonally adjusted prices slipped 0.7% annualized month-over-month.
“If you squint your eyes really hard, that latest monthly number ... was slightly negative,” Walden said.
Condos fell 1.8% YoY nationally, with Florida’s Gulf Coast down 8-10%.
The geographic split remains stark:
- The Midwest and Northeast are still positive;
- Much of the South and West is now negative YoY; and
- Austin, Texas (-20.2% from peak) and Cape Coral, Fla. (-14.1%) lead declines.
Equity Remains High But Is Softening In Key Markets
Total home equity hit a record in Q2, with tappable equity at $11.6 trillion. Growth, however, slowed to +1.5% YoY, the weakest in two years.
“Nearly a quarter of all markets… have experienced at least a 5% pullback in tappable equity,” Blix said, with Texas, Florida, and California most affected. Negative equity rose to 1% of mortgage holders (564,000 borrowers), up from 0.6% last year.
Bottom Line
This latest ICE housing/ mortgage markets look paints a picture of a market in transition: modest rate relief could spur refinance and purchase activity, but delinquency upticks — particularly in FHA — and regional price softening suggest a complex road ahead. Mortgage pros should also take note of the bleak borrower retention rates.
The data points to both emerging opportunities and heightened risks, making targeted outreach and product strategy critical.
