Economic growth steady in 2025, but FHA delinquencies climb

"the Federal Reserve Bank of New York show student loan and auto loan balances at record highs, while credit card balances have climbed to about $1.2 trillion. Delinquencies, particularly on credit cards, are also rising, with 90-day-plus late-payment rates for credit cards more than 12% higher than in prior years. Consumers are driving a lot of growth, but there are some signs of weakness for certain parts of the economy, Kan said, adding that these pressures could spill over into housing and mortgage performance."

"The labor market, meanwhile, is cooling from earlier peaks. In 2025, the economy added about 15,000 jobs per month, down sharply from 120,000 per month in 2024. The unemployment rate stands at 4.3%, while a broader underemployment gauge is higher. About 25% of unemployed workers have been out of work for more than six months, complicating their ability to keep up with mortgage payments."

"Inflation has eased from 9% at its peak to 2.4%, according to the Consumer Price Index, but h it remains above the Federal Reserve's preferred 2% level, Kan said. He also said that the impact of tariffs has been lower than expected. With inflation moderating and unemployment above 4%, the Fed has already cut rates three times in its past four meetings and is now in a wait-and-see stance, Kan said."

Student loan and auto loan balances are at record highs and credit card balances are about $1.2 trillion, with 90-day-plus credit card late-payment rates over 12% higher than in prior years. Consumer spending is driving growth, but pockets of weakness could spill into housing and mortgage performance. Job creation slowed sharply from roughly 120,000 monthly in 2024 to about 15,000 in 2025, with unemployment at 4.3% and a larger underemployment gauge; 25% of unemployed have been out of work more than six months. Inflation eased from a 9% peak to 2.4% CPI yet remains above 2%. The Fed has cut rates three times recently and one further cut is expected before second-quarter 2026, while mortgage performance is generally solid but shows rising stress in FHA portfolios.

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