Prepayments hit 4-year high after mortgage rates eased

Early-year rate movements led prepayments to a near four-year high in March, while delinquency trends also showed overall improvement typical of seasonal patterns, according to Intercontinental Exchange.

Mortgage prepayment speeds jumped 24 basis points to 1.06% from a level of 0.82% recorded in February, with the pace accelerating in three out of the last four months. March prepayments also came in 78.4% higher on a year-over-year basis from 0.59% recorded 12 months earlier, ICE Mortgage Technology's First Look report said

A declining rate environment throughout the winter supported refinance trends to drive prepayments upward, according to Andy Walden, head of mortgage and housing market research at ICE. Despite a March jump in mortgage rates immediately following the onset of the Iran War, fixed averages were still below their levels of a year ago.  

The rise of prepayment speeds came in a month that also saw overall delinquencies fall, even as foreclosure numbers went in the other direction reaching a six-year high mark. 

"March brought the seasonal improvement we typically expect to see this time of year," Walden said in a press release. "Delinquencies moved lower, with improvement across the earlier stages of mortgage performance as fewer loans rolled into delinquency."

Latter-stage distress worsened, though, with 154,000 additional borrowers either added to the rolls of 90-days past due or falling into foreclosure compared to last year.

"While overall mortgage performance remains healthy for most borrowers, the continued buildup in late-stage delinquencies and foreclosure pipelines remains worth watching," Walden said.

Delinquencies by stage

The U.S. delinquency rate fell to an overall rate of 3.35% in March, down 37 basis points from February's 3.72%. The current share is still 14 basis points higher from one year prior, but numbers showed diverging themes between stages. 

• The total volume of loans at least 30 days past due or in foreclosure came in at 2.12 million, dropping by 194,000 but still 8.2% higher year over year. 
• Mortgages 30 days past due but not in foreclosure finished at 1.84 million.
• Mortgages 90 days past due but not yet in foreclosure totaled 588,000.
• New delinquency inflows pulled back 23% on a seasonal basis and were flat year over year, while rollovers into latter stages also improved, the report said. 
• The cure rate was up 27% from February, totaling approximately 547,000 loans.
  

Foreclosure numbers continued to increase, though, with new starts up 16.7% from March 2025 to 39,000 units. Foreclosure sales also surged a notable 21.4% to 7,400, a development similarly found in new data from Auction.com.  

The number of homes in foreclosure inventory hit a six-year peak in March, rising to 273,000 properties, an increase of 8,000 month over month, ICE Mortgage Technology said in its report. The number represented an increase from 213,000 a year ago.

States with the greatest share of non-current mortgages were concentrated in the Southern U.S., with Mississippi at the top of the list at 8.01%. It was followed by its neighbors, Louisiana and Alabama at 7.95% and 5.94%.

The most stable housing markets, based on delinquency trends, were Hawaii, with a 2.24% non-current rate, Colorado at 2.2% and Montana at 2.11%.