Mortgage performance improved in March as seasonal patterns helped push delinquency rates lower, while a surge in prepayments signaled renewed borrower activity amid a more favorable rate environment.
New data released by Intercontinental Exchange showed that the national delinquency rate fell by 37 basis points to 3.35% during the month. The decline aligns with typical springtime improvements, though the rate remains modestly higher than a year ago.
At the same time, prepayment activity accelerated significantly. The monthly prepayment rate climbed to 1.06%, marking its highest level in nearly four years and standing 78% above March 2025 levels. The increase reflects heightened refinancing and home sale activity as borrowers respond to lower rates.
“March brought the seasonal improvement we typically expect to see this time of year,” said Andy Walden, head of mortgage and housing market research at ICE. “Delinquencies moved lower, with improvement across the earlier stages of mortgage performance as fewer loans rolled into delinquency. Prepayment activity also climbed to its highest level in nearly four years as borrowers responded to a lower-rate environment. At the same time, serious delinquencies continue to broadly trend higher, with 154,000 more borrowers 90-plus days past due or in active foreclosure, compared to the same time last year. While overall mortgage performance remains healthy for most borrowers, the continued buildup in late-stage delinquencies and foreclosure pipelines remains worth watching.”
Early-stage performance strengthened across the board. New delinquencies dropped 23% from February, while transitions into deeper stages of delinquency also improved. Meanwhile, cure activity rebounded, with 547,000 loans returning to current status — a 27% increase from the prior month.
Despite these gains, underlying stress persists in parts of the market. The number of borrowers who are 90 or more days past due, or already in foreclosure, remains elevated compared to last year. Foreclosure activity also continued to rise, with starts up 17% and sales increasing 21% year over year.
Foreclosure inventory reached 273,000 properties in March, the highest level since early 2020, underscoring the growing backlog of distressed loans.
Overall, the number of non-current loans — those either delinquent or in foreclosure — declined by 194,000 in March to 2.12 million. Even so, that figure is still 8.2% higher than the same time last year, highlighting the uneven recovery across borrower segments.
Geographically, Southern states continued to post the highest shares of non-current loans, led by Mississippi and Louisiana. In contrast, states such as Idaho, Washington and Colorado recorded some of the lowest levels of mortgage distress.
While improving seasonal conditions helped many borrowers regain footing, the continued rise in serious delinquencies and foreclosure pipelines suggests that risks remain beneath the surface of an otherwise stable mortgage market.
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