Rising Mortgage Delinquency Rates Strain Arizona Homeowners

Categories: Arizona Business NewsArizona State News

A family grapples with rising mortgage delinquency rates in Arizona.

News Summary

Arizona is witnessing a troubling rise in mortgage delinquency rates, impacting various demographics. As of Q1 2025, the delinquency rate reached 4.04%, with notable increases in foreclosure actions, particularly on VA loans. While some loan types saw declines in delinquency, Yuma, Arizona, has the second-highest mortgage delinquency rate among small U.S. metropolitan areas. The situation raises concerns about the financial pressures on homeowners and the need for effective support measures in the evolving housing market.

Arizona is currently facing a troubling trend of rising financial pressure for homeowners, as increases in mortgage delinquency rates have begun to strain certain demographics within the state. As of the end of the first quarter of 2025, the delinquency rate for mortgage loans on one-to-four-unit residential properties has risen to 4.04%, according to the Mortgage Bankers Association (MBA). This figure represents a rise of 6 basis points from the last quarter of 2024 and a 10 basis points increase from a year ago.

Additionally, foreclosure actions in Arizona have also seen a slight uptick, increasing by 5 basis points to reach 0.20% in Q1 2025. These metrics reflect mixed results in mortgage performance across various loan types, with conventional loan delinquencies experiencing a slight rise, while FHA and VA loan delinquencies have declined. However, despite these declines, foreclosure inventories have increased across all loan types, notably for VA loans, which recorded a rise in foreclosure levels to 0.84%. This figure marks the highest level since Q4 2019 and represents the largest quarterly change since the MBA began tracking these statistics in 1979.

The increase in VA loan foreclosures comes on the heels of the expiration of a voluntary VA foreclosure moratorium that was in effect through the end of 2024, implemented as part of the Veterans Affairs Servicing Purchase (VASP) Program. With the end of this program and without an approved replacement, further increases in foreclosure rates could occur, particularly if economic conditions worsen and no adequate loan workout options are available for struggling homeowners.

Yuma, Arizona, has emerged as a concern as it holds the second-highest mortgage delinquency rate among small U.S. metropolitan areas at 5%. Here, 1% of mortgages are now reported as being over 90 days delinquent. In comparison, Laredo, Texas, leads the pack with the highest delinquency rate among small metros. Arizona stands at 33rd position nationally in mortgage delinquency rates, whereas California is better off, being ranked 48th.

Despite the troubling delinquency rates, it is worth noting that as of October 2024, Arizona reported 28,000 fewer loans in active foreclosure compared to the previous year. Historical data reveals that foreclosure activity remained low in October, notwithstanding the increasing serious delinquency rates observed during that time. Nationally, the delinquency rate experienced a year-over-year rise of 6% and has remained elevated for five consecutive months. Moreover, seriously past-due loans reached a 17-month peak in October 2024, with foreclosure starts increasing by 12.2%, and completed foreclosures climbing by 10.1% during the same period.

On a broader scale, national credit delinquencies reached their height in five years, with rising mortgage debt being a significant contributing factor. Although the average credit score remained steady at 702, mortgage debt largely influenced increasing credit balances. Consumers are demonstrating a trend of prioritizing existing debt management over the acquisition of new credit, as reflected in recent statistics regarding credit card originations.

Overall, specific homeowner groups in Arizona are grappling with increasing financial pressures, which could foreshadow more severe implications if economic conditions and available support options do not improve. As the housing market navigates these challenges, stakeholders will need to remain vigilant in understanding the evolving landscape of mortgage delinquency and homeowner financial health.