ICE Mortgage Technology said in its December 2025 Mortgage Monitor report that declining mortgage rates helped to push servicer refinance retention to 28% in the third quarter — a 3.5-year high — as more homeowners sought to lower their monthly payments.
The report, released on Monday, tracks mortgage performance data from ICE’s most recent First Look report, which analyzed delinquency and foreclosure trends through the end of October.
ICE found that overall mortgage performance was strong in October, with the national delinquency rate falling by 7 basis points (bps) to 3.34%. That’s down 11 bps from the same time last year and 53 bps below the October 2019 pre-pandemic benchmark.
Andy Walden, ICE’s head of mortgage and housing market research, said modest rate relief this fall sparked a jump in mortgage applications and added to the strong performance.
“We’re now seeing the highest concentration of rate-and-term refinances in nearly five years, almost entirely driven by borrowers holding 2023-2025 vintage loans,” he said. “Notably, the market has become more rate sensitive as hundreds of thousands of borrowers move in and out of refinance incentive with small daily rate shifts.”
Nonbank servicers retained borrowers at nearly three times the rate of banks — 35% compared to 13%. Retention was highest for Federal Housing Administration (FHA) and U.S. Department of Veterans Affairs (VA) loans at 36%, followed by loans backed by Fannie Mae and Freddie Mac at 25%. Privately securitized loans saw the lowest retention at 6%.
Rate-and-term refinances made up 62% of all refi activity in October, the highest share in almost five years, ICE said. Nearly all (95%) rate-and-term refis in September and October involved borrowers with 2023–25 vintage loans.
These borrowers carried an average loan balance of $505,000 and a credit score of 762, and they cut their mortgage rates by an average of 0.92 percentage points, saving roughly $200 per month.
Home equity loan and home equity line of credit (HELOC) activity also increased. Second-lien home equity loan withdrawals rose to their highest level since 2007 in the third quarter, as homeowners with low-rate first mortgages looked for alternatives to tapping equity without refinancing their primary loan.
Improved affordability also played a role, helped by tighter Treasury yield spreads. The ICE report said that all 100 major U.S. metro areas have seen affordability improve year over year.
Average mortgage rates hovered around 6.25% in mid-November, putting the monthly payment on a median-priced home at roughly $2,126, or 29.7% of the median household income. ICE said that even though that’s still high by historical standards, it’s the lowest share since early 2023.
“ICE’s 2025 Borrower Insights Survey found that 78% of borrowers only shop one or two options before choosing a lender,” said Tim Bowler, president of ICE Mortgage Technology. “In a sensitive rate environment, this limited shopping behavior amplifies the importance of being first to reach motivated borrowers.”
Foreclosure activity remains historically low but is rising, ICE found. About 79,000 loans entered foreclosure between October and November, which is 15% below 2019 levels but the highest two-month total in more than five years.
Active foreclosure inventory is up 20% from a year earlier, and October’s 7,700 foreclosure sales marked a five-year high, although it’s still 40% below pre-pandemic levels.
FHA and VA loans are driving the increase, accounting for 85% of new starts and nearly all growth in active cases and sales. FHA foreclosures are up about 30,000 from last year, while VA foreclosures have risen by roughly 12,000.