ICE First Look: Increased Refinance Activity Drives Mortgage Prepayments Up

(House Stock Photo courtesy of Johnson via Unsplash)

Softening mortgage rates expanded the pool of refinance candidates in October and pushed prepayments to their highest level in three and a half years, according to ICE Mortgage Technology, Atlanta.

Andy Walden, head of mortgage and housing market research at ICE, noted this trend was largely driven by people who purchased homes at elevated interest rates in recent years seizing the opportunity to lower their monthly payments.

“Overall mortgage health remains solid, with continued improvement in delinquency rates across all stages,” Walden continued. “While foreclosure activity has ticked up, levels remain historically low. This uptick is driven by a rise in FHA foreclosures along with the resumption in VA foreclosures following last year’s moratorium.”

Other key takeaways from the October 2025 ICE First Look report include:

• Delinquencies improved: The national delinquency rate fell by 7 basis points in October to 3.34%. This is down 11 basis points from the same time last year and 53 basis points below the October 2019 pre-pandemic benchmark.

• Broad strength in delinquency rates: Performance improved across the board, with both early-stage (30-day) and late-stage (90-plus day) delinquencies declining during the month.

• Prepayments reached a multi-year high: The single month mortality rate, which tracks prepayments, rose by 27 basis points in October to 1.01%. This marks the highest level in 3.5 years and an increase of 16 basis points from last year, when interest rates were at similar levels.

• Foreclosure activity trending upward: Although October foreclosure starts slowed by 9.8% from the prior month, the overall trend continues to rise, ICE found. Foreclosure inventory is up by 37,000 (19%) year over year and foreclosure sales have increased by 1,900 (32%) from last year’s levels.

• Government loans are driving foreclosure growth: While foreclosure activity remains muted by historical standards, the number of loans in active foreclosure hit its highest level since early 2023, driven by a notable rise in FHA foreclosures (up 50% YoY) along with a resumption of VA activity following last year’s moratorium.