Charge-Off Rate on Single-Family Residential Mortgages

Banks write off loans they've given up on collecting. For mortgages, the rate has been essentially zero since 2020 and sat at or below 0.02% through every quarter of 2024 and 2025. The peak during the Great Recession was 2.8%, reached in late 2009.

The number is genuinely unusual. Before the GFC, mortgage charge-offs hovered near 0.1%. Even during the quieter 2015-2019 stretch, the rate ran at 0.05-0.25%. Zero is a different regime entirely.

Three things explain it. First, home prices have not fallen — equity cushions are large, so even a foreclosure tends to recover the loan amount at sale, meaning no charge-off. Second, post-Dodd-Frank underwriting pushed the riskiest mortgage products out of the bank book and into agency-guaranteed channels that don't show up in this series. Third, the Foreclosure Pipeline at 4.75 starts per completion means most cases resolve before any loss is booked.

The zero is not a signal that households are doing fine. Every other credit category is flashing strain — Credit Card Charge-Offs at 4.11%, All-Loan Charge-Offs at 0.61%. Mortgage charge-offs at zero means the distress this cycle is being absorbed by the unsecured side of the consumer balance sheet. Households are choosing which creditor to stiff, and the mortgage servicer is last on the list.