Feb 10, 2026 - Economy
Mortgage delinquencies are rising in low-income neighborhoods
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File this away in "everything is K-shaped."
- Mortgage delinquencies remain low overall, but they're climbing fastest in poorer neighborhoods where local economies are starting to crack, the New York Fed finds.
Why it matters: Consumers in low-income neighborhoods are falling behind on mortgage payments, underscoring an economy-wide trend where richer households remain resilient while poorer households feel the pain.
- "Although financial distress appears to be deepening for households in lower-income areas, borrowers in higher-income areas appear largely insulated from these pressures, at least as measured by mortgage delinquency," New York Fed researchers wrote in a blog post.
By the numbers: In aggregate, roughly 1.3% of mortgage balances became seriously delinquent in the fourth quarter of 2025 — a share that is similar to periods outside of the 2008 financial crisis, the New York Fed said.
- But that masks the deterioration under the hood. 90-day delinquency rates have skyrocketed among borrowers in the lowest-income ZIP codes, rising to 3% in the fourth quarter from 0.5% in 2021.
- That's a faster rise than in higher-income neighborhoods, where delinquencies are still historically low.
What to watch: The researchers say consumers are falling behind in areas where home prices are falling, though they find a stronger link between the health of regional job markets and delinquencies.
- The counties that have seen the biggest jumps in unemployment also saw mortgage delinquencies worsen over 2025.
- On the flip side, neighborhoods with more stable (or declining) jobless rates saw a smaller rise in mortgage delinquencies.
