Surge in Foreclosure Activity Amid Rising Homeownership Costs and Insurance Rates

Foreclosure activity in the U.S. has surged to its highest point in six years during the first quarter of this year, based on Attom's recent findings. Close to 119,000 properties were subjected to foreclosure filings, marking a 26% year-over-year increase. This uptick returns foreclosure occurrences to levels reminiscent of early 2020 before the onset of extensive mortgage relief programs introduced during the COVID-19 pandemic, which had substantially decreased foreclosure rates.

Rising Homeownership Costs

Experts highlight that the current rise in foreclosure numbers is a return to normalcy rather than a broader signal of financial distress among borrowers. Yet, escalating costs related to homeownership are imposing financial pressure. Notably, insurance premiums, property taxes, and homeowners association dues have spiked recently. For instance, Insurify reports that the average annual homeowners insurance premium rose to $2,948 in 2025, a 12% jump compared to 2024, while Attom notes average property taxes grew by 3% to $4,427.

These increasing costs are burdening homeowners despite fairly low current mortgage rates. Many borrowers with pre-2022 loans secured interest rates under 4%. Nevertheless, the escalation in non-mortgage expenses has heightened their overall financial commitments.

Challenges for New Homeowners

Newer homeowners are experiencing particular difficulties. Those purchasing homes in recent years often face higher mortgage rates. Additionally, in some areas where home values have faltered, borrowers might find themselves in a position owing more than their property's worth, which complicates refinancing or selling opportunities and elevates the risk of falling behind on payments.

Concurrently, the availability of relief options has diminished. Numerous foreclosure prevention measures from the pandemic have expired, and federal policies have evolved. A notable change announced by the Federal Housing Administration in October restricts homeowners to accessing loan modifications once every two years, thus reducing flexibility in staving off foreclosure.

Market Dynamics and Borrower Outcomes

Overall trends in mortgage payments reflect rising costs. According to Realtor.com, the average monthly mortgage payment reached $2,005 in the fourth quarter of last year, inclusive of both long-term homeowners with favorable rates and newer borrowers facing higher costs. For newly originated mortgages, monthly payments surpassed $2,000 initially in September 2022 and have remained elevated due to continued high interest rates.

The current foreclosure data illustrates a transition in market dynamics as pandemic-era supports wane and costs associated with homeownership escalate. While these foreclosure levels seem more aligned with historical precedents, the cost pressures from insurance, taxes, and other expenses remain significant factors shaping borrower outcomes.