July 2025 Market Insight from KW Default Solutions

July 2025 Market Insight from KW Default Solutions

Early Stress Signals in the Housing Market as Equity Shrinks and Risk Rises
According to ICE Mortgage Technology’s July 2025 Mortgage Monitor, while the national housing market continues to cool gradually, warning signs are emerging below the surface—especially among recent homebuyers and borrowers with limited financial cushion.
Key stress indicators are forming in three main areas:
 

1. Negative Equity is Rising in Key Markets
Softening home values across the Sunbelt and western U.S. are pushing more homeowners—particularly those who bought in 2023–2024 using FHA or VA loans—into underwater positions. ICE reports that in areas like Cape Coral, FL, 27% of recent loans are now underwater. In Austin, TX, it's 18% for 2022 loan vintages.
One in four seriously delinquent loans nationwide would be in a negative equity position today if sold at distressed REO prices—something we at KW Default Solutions monitor closely.
 

2. Short-Term Affordability Fixes Carry Long-Term Risk
This year, over 8% of buyers are relying on ARMs (adjustable-rate mortgages) or temporary buydowns to secure lower monthly payments. While these loans offer short-term relief, they also come with potential payment shocks if rates stay high or reset upward—something many buyers may not be fully prepared for.
 

3. Student Loan Payments Are Creating New Mortgage Risk
The federal restart of student loan payments in May 2025 is creating new financial strain. ICE’s data (powered by TransUnion) shows that:
Nearly 1 in 5 mortgage holders also have student loans
Among FHA borrowers, nearly 30% carry student debt
Those who are behind on student loans are 4x more likely to become delinquent on their mortgage
These trends make it increasingly important to proactively identify and support at-risk borrowers before they fall behind.
 

Final Thought from KW Default Solutions
The report underscores something we’ve been saying for months: average national data masks local pain points. Borrowers with minimal equity, layered debt, or complex financing are the first to feel pressure when markets slow.
If you're an investor, servicer, or homeowner navigating this shifting landscape—now is the time to stay informed, stay proactive, and align with professionals who specialize in distressed and defaulted property strategies.
Whether it's REOs, pre-foreclosures, short sales, or early-stage homeowner support, KW Default Solutions is here to help you plan the next move. http://www.KWDefaultSolutions.com
 

 Sources:
ICE Mortgage Monitor – July 2025 Report: [ICE.com Mortgage Reports](https://mortgagetech.ice.com/resources/data-reports)
ICE Home Price Index & McDash loan performance data
ICE/TransUnion student loan & mortgage risk analysis