High Insurance, Property Taxes Top Risks For Triggering Mortgage Delinquencies

What poses the greatest threat to rising mortgage delinquencies in 2024?

Auction.com, a marketplace for distressed home sales, recently conducted a survey of default servicing leaders and found that the primary concerns about rising delinquencies are increasing homeowners' insurance and property taxes. Respondents assigned 37% out of a hypothetical 100 risk factor points to hidden costs, beating out any other factor.

Rising consumer debt delinquencies were not far behind with 32%, followed by rising unemployment at 15%, commercial mortgage defaults at 10%, and falling home prices at 6%. The survey was conducted in April, and respondents included banks, nonbanks, mortgage asset owners and investors, government agencies, and government-sponsored enterprises.

The survey comes as insurance costs for homeowners continue to rise and the escalating impacts of climate change on America's housing market has government and industry raising the alarm and searching for solutions.

"Given the low default environment we’re in, this finding serves as an early warning of what could trigger more defaults in the future, especially if we continue to see more natural disaster events that, in turn, put more upward pressure on home insurance rates," said Daren Blomquist, a vice president of market economics at Auction.com.