Although remaining at historically low levels, serious consumer-level delinquency rates (60+ DPD) for mortgage loans have progressively increased from 0.89% in Q2 2023 to 1.14% in Q2 2024 and 1.27% in Q2 2025. Payment-to-income (PTI) ratios and mortgage delinquency are directly correlated, according to a recent report by TransUnion, which comes as mortgage delinquency rates have increased.
PTI can assist lenders in more precisely identifying customers who could be more likely to become delinquent by comparing a borrower’s monthly debt obligations to their gross monthly income.
Changes in PTI for non-mortgage products, including credit cards, were found to be strongly and consistently associated with increases in mortgage delinquency rates the following year. Given that rises in non-mortgage debt obligations might serve as a precursor to possible issues with mortgage performance, this research emphasizes the significance of tracking PTI patterns over time throughout a consumer’s whole credit portfolio.
Chances of Mortgage Delinquency Increased as Consumer PTI Ratios on Credit Cards Tick Up
| March (2023) | June (2023) | September (2023) | December (2023) | |
| Credit Card Consumer Payment-to-Income Ratio (%) | 2.18 | 2.25 | 2.31 | 2.33 |
| March (2024) | June (2024) | September (2024) | December (2024) | |
| 60+ DPD Mortgage Delinquency (%) | 0.42 | 0.46 | 0.56 | 0.63 |
Examining PTI Trends, Indicators & What it Means for Consumers
The investigation, which was carried out over the course of 2024, concentrated on how increasing debt levels and variations in PTI across different credit products—including student loans, credit cards, and Home Equity Lines of Credit (HELOCs)—may act as early indicators of financial stress. A large and pertinent sample for evaluating new risk indicators was provided by the evaluation of these trends specifically among the almost 57 million mortgage consumers who were currently owed money on their loans at the time of the recent analysis.
“The study clearly demonstrates that an increase in payment-to-income ratios for select non-mortgage credit products serves as a strong and reliable signal that these borrowers are significantly more likely to experience mortgage delinquency in the future,” said Jason Laky, EVP and Head of Financial Services at TransUnion. “Moreover, evolving patterns in credit card usage may provide additional early indicators of emerging financial stress, offering valuable insights for lenders.”
Analyzing PTI ratio trends for student loans and HELOCs revealed a similar pattern. Rising PTI ratios were consistently and clearly associated with a higher chance of mortgage delinquency in each instance. This implies that borrowers’ capacity to make their mortgage payments on time may become more difficult as they devote a larger percentage of their income to paying off various kinds of debt.
For the earliest possible insight into new risks of mortgage default, mortgage lenders should establish a regular and proactive plan for gathering cross-wallet credit data from consumers, ideally on a quarterly basis.
Lenders can find important trends in consumer credit behavior and new risks—which frequently come before changes in credit scores—by examining trended credit data. More thorough risk evaluations are made possible by this deeper, historical view, which also improves the capacity to predict financial stress before it manifests itself through conventional scoring methods.
“In this challenging economic environment, lenders must leverage every available tool at their disposal to more effectively segment and manage risk,” said Satyan Merchant, SVP and Auto & Mortgage Business Leader at TransUnion. “Trended credit data can play a critical role in identifying shifts in key attributes such as aggregate excess payment, non-mortgage delinquencies, and debt-to-income ratios. These innovative insights can help pinpoint consumers who are at a higher likelihood of becoming delinquent and, importantly, enable lenders to proactively contact and work with consumers at heightened risk of default to help them stay on track and avoid falling behind on payments.”
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The post Rising Payment-to-Income Ratios Flagged as Early Warning for Mortgage Delinquencies first appeared on The MortgagePoint.
