SACRAMENTO, United States, Nov. 13 (Xinhua) -- Nearly 900,000 American homeowners have slipped underwater on their mortgages as home prices plummeted in some regions, marking the highest proportion of distressed borrowers in three years and signaling deeper trouble in the U.S. housing market, MarketWatch reported Thursday.
Citing data released by Intercontinental Exchange (ICE) on Nov. 9, the financial information website said that these homeowners currently owe more on their mortgages than their properties are worth, representing 1.6 percent of all mortgage holders nationwide. The phenomenon reveals a sharp reversal from the extraordinary equity gains that peaked in 2022.
Andy Walden, head of mortgage and housing market research at ICE, was quoted as saying that most of this activity stemmed from loans originated between 2023 and 2025. Over 90 percent of homeowners currently underwater on their mortgages took out loans within the past three and a half years, according to ICE's latest Mortgage Monitor report.
The crisis hits hardest where home prices have fallen sharply. In Cape Coral, Florida, where prices have dropped 15 percent from their peak, 11 percent of all mortgages are now underwater, including over one-third of those issued in 2023 and 2024. In Austin, Texas, where prices have fallen 21 percent, nearly 7 percent of mortgages have slipped into negative equity.
Borrowers with low down payment loans backed by the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA) face even grimmer prospects, with negative equity rates exceeding 60 percent in some cases, the report said. FHA and VA programs are commonly favored by first-time buyers and service members who purchase with down payments as low as 3.5 percent.
The underwater crisis coincides with rising delinquencies. FHA loans now account for 47 percent of all mortgage delinquencies and 52 percent of serious delinquencies, defined as 90 or more days past due. Meanwhile, additional borrowers face vulnerability, with 6.9 percent of all mortgage holders maintaining less than 10 percent equity in their properties.
According to housing analysts, the trend warranted serious concern but does not yet constitute a full-blown crisis. Rising shares of underwater homes represent a warning sign that points toward potential slower price growth, more distressed sales, and greater risk if local economies weaken further, according to analysis from Realtor.com. ■