But
the
picture
is
far
from
uniform,
Kan
said.
Data
from
the

Federal
Reserve
Bank
of
New
York
show

student
loan
and
auto
loan
balances
at
record
highs,
while

credit
card
balances
have
climbed
to
about
$1.2
trillion.
Delinquencies,
particularly
on
credit
cards,
are
also
rising,
with
90-day-plus
late-payment
rates
for
credit
cards
more
than
12%
higher
than
in
prior
years.

“Consumers
are
driving
a
lot
of
growth,
but
there
are
some
signs
of
weakness
for
certain
parts
of
the
economy,”
Kan
said,
adding
that
these
pressures
could
spill
over
into
housing
and
mortgage
performance.

The
labor
market,
meanwhile,
is
cooling
from
earlier
peaks.
In
2025,
the
economy
added
about
15,000
jobs
per
month,
down
sharply
from
120,000
per
month
in
2024.
The
unemployment
rate
stands
at
4.3%,
while
a
broader
underemployment
gauge
is
higher.
About
25%
of
unemployed
workers
have
been
out
of
work
for
more
than
six
months,
complicating
their
ability
to
keep
up
with

mortgage
payments.

Younger
workers
have
been
hit
especially
hard.
Unemployment
for
college-educated
workers
ages
20
to
24
has
risen,
making
it
tougher
for
recent
graduates
to
form
households
and
enter
the
housing
market.

Inflation
has
eased
from
9%
at
its
peak
to
2.4%,
according
to
the
Consumer
Price
Index,
but
h
it
remains
above
the

Federal
Reserve’s
preferred
2%
level,
Kan
said.
He
also
said
that
the
impact
of

tariffs
has
been
lower
than
expected.

With
inflation
moderating
and
unemployment
above
4%,
the
Fed
has
already
cut
rates
three
times
in
its
past
four
meetings
and
is
now
in
a
wait-and-see
stance,
Kan
said.
He
added
that
the
MBA
expects
one
more
rate
cut
between
now
and
second-quarter
2026,
but
incoming
labor
and
inflation
data
will
dictate
the
pace.

Walsh,
the
trade
group’s
vice
president
of
industry
analysis,
said
mortgage
performance
remains
relatively
strong
overall.
But
it’s
showing
growing
stress
in
certain
segments,
especially
in
FHA
portfolios,
where
serious
delinquencies
are
at
their
highest
rates
—
excluding
the
COVID-19
pandemic
—
since
2011
and
2012.

MBA’s
National
Delinquency
Survey
shows
the
overall

delinquency
rate
at
4.26%,
Walsh
said,
which
is
about
100
basis
points
(bps)
below
the
historical
average.
But
performance
varies
sharply
by
product.

“If
you
were
to
take
out
COVID
and
pretend
it
never
happened,
and
look
at
the
delinquency
rates
over
time,
you
have
to
go
back
to
around
2011
or
2012
to
see
[FHA]
at
this
level,”
Walsh
said.

FHA
serious
delinquencies,
which
are
loans
90
days
or
more
past
due
or
in

foreclosure,
have
risen
significantly
and
now
sit
nearly
900
bps
above
conventional
loans.
Early-stage
FHA
delinquencies
have
leveled
off,
but
serious
delinquencies
are
up
about
75
bps
from
a
year
earlier.

Walsh
cited
changes
to

FHA’s
loss-mitigation
waterfall,
uneven
labor
market
conditions
and
stretched
affordability
as
contributing
factors.
Loans
originated
in
2020
and
2021
are
performing
relatively
well,
while
2018–2019
and
2022–2023
vintages
show
higher
stress.

Forbearance
levels
remain
far
below
the
pandemic
peak
of
4.3
million
loans
but
have
not
disappeared.

Ginnie
Mae
loans
carry
a
forbearance
rate
of
about
1.2%,
largely
tied
to
economic
hardship.

“The
question
is,
are
these
hardships
truly
temporary
or
not,
or
is
this
just
a
pause
to
breathe
before
the
inevitable?”
Walsh
said.

Roughly
30%
to
35%
of
current
loan
workouts
involve
borrowers
who
previously
received
assistance,
signaling
vulnerability
in
parts
of

servicing
portfolios.
Rising
property
taxes
and
insurance
premiums
have
added
pressure,
often
compounding
other
financial
strains.

Servicing,
meanwhile,
remains
a
key
profit
driver,
particularly
for
independent
mortgage
banks
(IMBs).
Nondepositories
now
account
for
about
73%
of
the
top
25
agency
servicers.
About
85%
of
IMBs
are
profitable,
a
share
that
would
fall
to
roughly
75%
without
accounting
for
servicing
income.