Higher insurance rates and taxes are resulting in rising monthly payments

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Rising property taxes and insurance costs are driving up mortgage escrow payments, destabilizing what was once a fixed monthly cost.
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Florida, South Carolina, and Georgia see the steepest upticks in serious mortgage delinquencies, correlating with natural disaster impacts.
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Government-backed FHA and VA loans face significantly higher delinquency rates, especially in states with surging escrow costs.
For decades, owning a home in the United States meant achieving a critical milestone financial stability. At the heart of this dream was the fixed monthly mortgage, a predictable cost in an otherwise volatile economic landscape. But that promise is beginning to unravel.
New data from housing analytics firm Cotality reveal a troubling trend: serious mortgage delinquencies, defined as homeowners who are 90 days or more behind on payments, are on the rise for the first time in over three years. But this time, its not subprime lending or reckless borrowing to blame. Instead, it's the ballooning costs that come after a mortgage is signed: property taxes and homeowners' insurance.
Escrow costs are the new mortgage threat
In states like Florida, South Carolina, and Georgia, property taxes and insurance premiums have surged over the past five years. In Florida alone, escrow payments which cover taxes and insurance have jumped 62%. This figure mirrors the states 38 basis-point increase in serious delinquencies, placing it at the top of Cotalitys list.
While these three Southeastern states lead the pack, others like Nebraska, North Carolina, and Colorado are not far behind. The trend is clear: states with significant increases in escrow costs are also those with the steepest upticks in mortgage delinquencies.
Natural disasters are compounding the issue. In South Carolina, 14 insurers went under between 2020 and 2023, triggering a sharp rise in premiums. Georgia, meanwhile, has experienced a $700 average increase in property taxes over the same period. For homeowners already stretched thin, these mounting costs are proving untenable.
Government-backed loans
The financial pressure is not evenly distributed. FHA and VA loan recipients often first-time buyers or lower-income families are bearing the brunt of the crisis. These loans, though instrumental in expanding access to homeownership, leave borrowers with slimmer financial cushions.
According to Cotality, FHA loan holders are five times more likely to become seriously delinquent than those with conventional loans. VA loans fare slightly better but still exhibit delinquency rates 3.5 times higher. These borrowers are often the first to feel the impact of rising escrow costs, especially in disaster-prone areas where insurance premiums can spike overnight.
This trend calls into question the foundational belief that homeownership provides long-term financial stability. While mortgage interest rates may be locked in, taxes and insurance are not and theyre climbing rapidly.
Since 2019, national property tax bills have grown 15.4%. Insurance premiums, especially in regions prone to hurricanes, floods, and wildfires, are also surging. In states where both escrow costs and unemployment are rising such as Mississippi, which now holds the highest overall delinquency rate the situation is especially dire.
Posted: 2025-07-15 11:23:40