All posts by Jonathan Reese

As we move into the final stretch of 2025, the U.S. housing market is balancing sustained, but stagnant originations volumes with softening credit performance. For mortgage lenders and servicers, this presents both challenges and opportunities. Experian’s highlights a housing market that is not in crisis but showing signs of strain that require attention and strategic adaptation. Identified risk trends: Escrow pressures and student loan headwinds Meanwhile, the return of student loan repayments is having a ripple effect across mortgage performance — particularly among borrowers with sub-660 credit scores and those already behind on student loans. These borrowers are exhibiting significantly higher mortgage delinquency rates, revealing an urgent need to track cross-credit dependencies more closely. In the home equity space, the delinquency picture is mixed. HELOC delinquencies have flattened, while HELOANs are experiencing a divergence — early-stage delinquencies are falling, but late-stage delinquencies are rising. These trends indicate relative stability in home equity credit performance, but attention should be paid to segments of the market, like securitized home equity, for deterioration in credit performance. Refinance revival: A glimmer of growth Despite these risk signals, growth is returning in key areas. Refinance activity is rebounding, driven by dips in Treasury yields and renewed borrower interest in lowering monthly payments. Originations are increasing, and mortgage direct mail marketing has resumed after a period of stagnation. Both prescreen and invitation-to-apply (ITA) campaigns are on the rise, signaling a re-engagement with the borrower market. Home equity lending is also heating up, particularly in the prescreen space, with fintechs aggressively scaling their outreach. This resurgence in marketing creates an opening for lenders — but only those equipped to act quickly. Market fundamentals: Why housing supply still lags Beneath these lending and marketing shifts lies a broader macroeconomic narrative. GDP growth is slowing, unemployment is creeping upward and inflation remains stubbornly high. Mortgage rates hover between six and seven percent, contributing to one of the most prominent constraints in today’s market: the lock-in effect. Over 80% of U.S. homeowners hold mortgage rates significantly below current levels, discouraging movement and keeping housing inventory tight. Even as new listings improved earlier this year, seasonal adjustments and elevated rates have brought supply back down. Construction activity remains uneven. While there’s been some progress in completions, overall new starts remain weak. Large-scale developers remain cautious, further constraining supply and sustaining price pressure in many markets. Strategic imperatives for lenders Given this context, what should lenders prioritize? First, portfolio risk management must evolve to keep pace with borrower realities. Custom risk models, proactive account reviews and early-warning systems can help surface emerging risks, especially among vulnerable cohorts with multiple debts or high debt-to-income ratios. Second, marketing strategies must become more agile. Investing in scalable tools like Experian’s self-service prescreen and/or account review enables faster execution, real-time list building, and more efficient targeting. With refinance activity picking up, this agility is key to capturing demand before it fades. Third, lenders must lead with data. From credit performance to macroeconomic indicators, strategic decisions need to be grounded in real-time insights. Aligning marketing, servicing, and risk teams around shared, data-driven intelligence will separate the winners from the rest. Bottom line: A controlled descent, not a crash In summary, the November 2025 housing market presents a picture of controlled deceleration, not a free fall. Borrowers are under pressure, but the system remains stable. For lenders, the message is clear: act now to optimize your portfolio, accelerate outreach and prepare for cyclical demand shifts. With the right strategies, lenders can not only weather the current environment but position themselves for the next wave of opportunity. This article uses data from both Experian Credit Bureau and Mintel: Global Market Intelligence & Research Agency

After a borrower opens a mortgage, their financial profile doesn’t stay static. Credit scores, debt-to-income ratios (DTI), and annual incomes evolve—sometimes positively, sometimes negatively—depending on both the individual borrower’s specific behavior and situation, as well as broader economic conditions, including factors like unemployment and interest rates. When we factor in rising escrow costs for home insurance and property taxes, the picture becomes even more complex.   Unfortunately, traditional market data for both private label and agency MBS, as well as “servicing” datasets generally used to build analytics for whole loan strategies, contain virtually no information regarding a borrower’s current credit profile. The current pay status of the subject loan is sometimes provided.  However, credit score and DTI values (if provided at all) are as of the origination date only. No information is provided regarding the borrower’s home insurance or property tax premiums.  In other words, as a mortgage loan seasons and the borrower’s credit profile drifts as new debts are added or paid off, payments on auto loans, student loans, credit cards, even other mortgages on the subject property are made or missed, and home insurance policy costs double (or triple!) in some cases, MBS investors using traditional market data only are truly flying blind with respect to the borrowers’ current credit health. Fortunately, more complete alternatives to supplement traditional market data exist. In this article, we’ll analyze Experian’s Mortgage Loan Performance (MLP) data, a monthly-refreshed join across loan level performance, borrower credit profile and property data for all US mortgages since 2005, to explore borrowers’ credit profile drift since loan origination.  This dataset contains current credit scores, tradeline balances and performance, escrow account information, and modeled income for all borrowers.  Section 1: Credit Score Migration Since Origination — Who Improves and Who Slumps?  Using the MLP dataset, we examined current and at-origination borrower credit profiles for over 42 million mortgages originated from January 2020 through July 2025.  Segmenting the data by different mortgage products shows distinct score migration patterns since loan origination as illustrated in Figure 1:  Conventional Loans (FNMA/FHLMC):   Conventional borrowers have experienced strong positive gains in credit score since origination for the 2020–2022 vintages with average VantageScore 4.0 migration of +11 to +22 points  For the more recent 2023-2025 vintages, borrowers have experienced flat or negative drift of averaging -6 to +2 points  FHA Loans:   FHA borrowers have experienced mostly negative VantageScore 4.0 drift of -6 to -19 points, with the steepest decline to date in the 2022–2023 vintages   VA Loans:   We see a positive drift for early vintages, especially 2020 to 2022 vintages, but a slightly negative drift for more recent vintages of -1 to -4 points.  Non-Agency Loans:    Similar to conventional loans, we see a positive credit score drift for 2020–2022 vintages, turning negative for 2024–2025 with an average drift of -1.5 to -4 points  Figure 1:  Vantage 4.0 Migration Drift Since Origination[1] Key Insights: Over the past 6 years, Conventional borrowers have generally improved their credit profile post-origination, notwithstanding small dips to-date for the last couple vintages.  On the other extreme, 4 of the 6 last FHA vintages have experienced credit score deterioration to date.   Beyond the obvious increase in delinquency and default risk due to deteriorating credit scores, a borrower’s ability to refinance efficiently is also impacted by credit score deterioration. A loan’s propensity to default or voluntarily refinance is  influenced by the borrower’s current credit score, which is absent from traditional market data, though present in MLP.  In this way, current credit score is a critical field for both nonagency and agency MBS analyses. Section 2: DTI and Income   As illustrated in Figures 2 through 4, even as incomes rise, DTI often climbs faster, signaling potential borrower stress:  Example (FHLMC):  2020 Vintage: DTI +5.9 points, Income +$24K 2023 Vintage: DTI +23.5 points, Income +$28K Figure 2:  DTI and Income Drift Since Origination for all mortgages  Figure 3:  DTI and Income Drift Since Origination for Freddie Mac mortgages Figure 4:  DTI and Income Drift Since Origination for GNMA, VA mortgages  Insights: Across all loan types, on average, borrowers are earning more relative to when they opened the loan but also taking on additional obligations over time at an even faster rate, which inflates their debt-to-income ratio.  Particularly striking is the DTI drift for the 2023 GNMA VA vintage, rising over 30 points in two years!  In addition to elevated risk of delinquency and default, elevated DTI also reduces the borrower’s ability to refinance efficiently by affecting the borrower’s ability to qualify for competitive refinancing rate.  Investors relying solely on traditional market data have no vision into the borrower’s current DTI, thereby limiting their ability to model and manage both default and voluntary prepayment risk.   Section 3: Escrow Pressure—Taxes and Insurance Surge  As illustrated in Figure 5, MLP data reveals that from 2021 to 2024:   Taxes haves increased by an average of 28.8%  Home Insurance rates have increased by an average of 54.4%, becoming the fastest-growing home ownership expense within this period  Higher escrow payments squeeze borrower budgets, driving increased delinquency risk and decreased affordability. Traditional market data contains no information regarding borrowers’ tax or insurance premium burdens. Figure 5: Average escrow payment increases from 2021 to 2024 Conclusion  Score migration, evolving income and DTI, and escalating escrow & tax costs create a dynamic risk environment for borrowers. Borrowers’ constantly changing credit health drives both credit (likelihood of default) and voluntary prepayment (credit score and DTI influence both ability and incentive to refinance) risks. In this context, monitoring borrower credit and income post-origination is critical.  Traditional market data for both private label and agency MBS contains no information related to a borrower’s current credit score, DTI, income or tax & escrow burden. Experian’s Mortgage Loan Performance dataset contains all this information, at the loan level, for ~100% of the US mortgage market, enabling better segmentation, predictive modeling, and risk management for both credit and prepayment risk.  Read our previous blog about Residential Mortgage Prepayments [1] All statistics are derived from Experian's Mortgage Loan Performance (MLP) Dataset

Executive Summary The July 2025 housing market reveals a landscape of shifting consumer behaviors, evolving lender strategies, and continued strength in borrower performance—especially within home equity. Origination volumes have dipped slightly, but direct marketing, particularly through Invitation to Apply (ITA) campaigns, is accelerating. As key players exit the space, gaps are opening across both marketing and origination, creating clear opportunities for agile institutions. This phase signals both caution and potential. The winners will be those who refine their marketing, sharpen segmentation, and deploy smarter risk monitoring in real time. TL;DR Risk Profile: Mortgage and HELOC delinquencies remain low. Slight increases in 90+ DPD are not yet cause for concern. Mortgage Originations: Modestly down, but marketing remains aggressive. Invitation to Apply (ITA) volumes outpacing prescreen. Home Equity Originations: Stable originations, competitive marketing volumes. ITA volumes outpacing prescreen similar to mortgage. Opportunity: Targeted direct mail and refined segmentation are growth levers in both mortgage and home equity. Risk Environment: Resilient Yet Watchful Experian’s July data shows both mortgage and home equity delinquencies hovering at historically low levels. Early-stage delinquencies dropped in June, while late-stage (90+ days past due) nudged upward—still below thresholds signaling broader distress. HELOCs followed a similar path. Early-stage movement was slightly elevated but well within acceptable ranges, reinforcing borrower stability even in a high-rate, high-tariff environment. Takeaway: Creditworthiness remains strong, especially for real estate–backed portfolios, but sustained monitoring of 90+ DPD trends is smart risk management. Home Equity: Volume Holds, Competition Resets Home equity lending is undergoing a major strategic reshuffle. With a key market participant exiting the space, a significant share of both marketing and originations is now in flux. What’s happening: Direct mail volumes in home equity nearly match those in first mortgages—despite the latter holding larger balances. ITA volumes alone topped 8 million in May 2025. Total tappable home equity stands near $29.5 trillion, underscoring a massive opportunity.(source: Experian property data.) Lenders willing to recalibrate quickly can unlock high-intent borrowers—especially as more consumers seek cash flow flexibility without refinancing into higher rates.   Direct Mail and Offer Channel Trends The continued surge in ITA campaigns illustrates a broader market pivot. Lenders are favoring: Controlled timing and messaging Multichannel alignment Improved compliance flexibility May 2025 Mail Volumes: Offer Type Mortgage Home Equity ITA 29.2M 25.8M Prescreen 15.6M 19.0M Strategic Insights for Lenders 1. Invest in Personalized Offers Drive better response rates with prescreen or ITA campaigns. Leverage data assets like Experian ConsumerView for ITA’s for robust behavioral and lifestyle segmentation. For prescreen, achieve pinpoint-personalization with offers built on propensity models, property attributes, and credit characteristics. 2. Seize the Home Equity Opening Use urgency-based messaging to attract consumers searching for fast access to equity—without the complexity of a full refi. Additionally, as mentioned above, leverage propensity, credit, and property (i.e. equity) data to optimize your marketing spend. 3. Strengthen Risk Controls Even in a low-delinquency environment, vigilance matters. Account Review campaigns, custom scorecards, and real-time monitoring help stay ahead of rising 90+ DPD segments. 4. Benchmark Smarter Competitive intelligence is key. Evaluate offer volumes, audience segmentation, and marketing timing to refine your next campaign. FAQ Q: What does the exit of a major home equity player mean? A: It leaves a significant gap in both marketing activity and borrower targeting. Lenders able to act quickly can capture outsized share in a category rich with equity and demand. Q: How should lenders respond to the evolving risk profile? A: Continue to monitor performance closely, but focus on forward-looking indicators like trended data, income verification, and alternative credit signals. Conclusion The housing market in July 2025 presents a clear message: the fundamentals are sound, but the strategies are shifting. Those ready to optimize outreach by making smarter use of data will seize a disproportionate share in both mortgage and home equity. Want to stay ahead? Connect with Experian Mortgage Solutions for the insights, tools, and strategies to grow in today’s evolving lending environment.