Borrowers living in lower-income ZIP codes are driving the growth of mortgage delinquency rates across the country, according to the latest data by the New York Federal Reserve.
Meanwhile, borrowers living in higher-income areas remain relatively insulated from the financial pressures pushing up rates for the less wealthy households, data shows, reporting historically low mortgage delinquency rates.
Why It Matters
Mortgage delinquency rates, though now close to low levels on a longer-term basis, have been inching up for the past few years.
Overall, roughly 1.3 percent of mortgage balances became seriously delinquent in the fourth quarter of 2025—“a share that looks very similar to the averages observed outside of the period around the ‘Great Recession,’” the New York Fed said. After the subprime mortgage crisis, mortgage delinquency rates were more than 8 percent.
The number shows that while the U.S. economy overall continues to show resilience and perform beyond expectations—with the latest employment report showing that the country added 130,000 jobs between December and January and wages continue to rise—some Americans are still struggling with higher costs, especially when it comes to housing.
But, as often happens, it is the lower-income households that are facing the biggest challenges, falling behind on payments, endangering their credit scores, and ultimately running the risk of losing their homes.
What To Know
Researchers at the New York Fed found that there is a direct connection between which households become delinquent on their mortgages, their income levels, the places where they live, and the labor and housing dynamics they navigate.
The bank based its analysis on anonymous credit report data from Equifax, one of the largest consumer credit reporting agencies in the world. They then used ZIP code level adjusted gross income from the IRS Statistics of Income to categorize borrowers into four income groups of equal size.
They found that borrowers in the lowest-income ZIP codes saw their 90-plus-day delinquency rates surge since 2021, from roughly 0.5 percent to nearly 3.0 percent in the last quarter of last year.
Delinquency rates were also rising for borrowers living in middle-income ZIP codes, though not as fast as for the lowest-income group. Those in the highest-income areas, on the other hand, reported historically lower delinquency rates.
It is not just about income levels. A county-level analysis conducted by the researchers also found a clear link between higher mortgage delinquency rates and higher unemployment rates, with counties experiencing the steepest increases in unemployment also reporting a jump of nearly 0.6 percentage points over the past year in mortgage delinquency.
On the other hand, counties where unemployment rates have remained stable or declined reported an increase in newly delinquent mortgages of about 0.2 percentage points.
Another factor driving up mortgage delinquency rates was housing market dynamics, with falling home prices linked to a rising number of borrowers falling behind on their monthly payments.
This phenomenon was observed in counties along the Gulf Coast of Florida that have seen a sharp home price correction after overheating during the COVID-19 pandemic.
What Happens Next
The findings of the New York Fed represent another sign that many Americans are still struggling with the high cost of housing, an issue that President Donald Trump has promised to fix during his second term.
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More Low-Income Americans Are Defaulting on Mortgages
