Underwater mortgage rates climb nationally, with Minnesota seeing sharp surge
The share of U.S. homeowners whose loans exceed property values by at least 25% rose to 3.2% in Q2, according to ATTOM data, and Minnesota recorded the highest rate at 12.1%.
A new ATTOM report indicates that the proportion of American homeowners whose mortgage balances are at least 25% higher than their homes' estimated values rose to 3.2% in the second quarter, compared with 2.7% a year earlier. Minnesota experienced the most dramatic increase, reaching 12.1% of mortgaged properties seriously underwater, up from 3% in the previous quarter. Louisiana and Iowa posted the next highest rates at 10.3% and 7.8% respectively, while Mississippi and Arkansas rounded out the top five.
The share of homes considered equity-rich dropped to 41.1%, marking the fourth consecutive quarterly decline and the lowest point in almost five years. Rob Barber, ATTOM's CEO, noted that although equity measures remain better than pre-2020 levels, the recent trends warrant close monitoring. States such as New York, New Jersey and Vermont reported much lower underwater rates, staying under 2%.
Why it matters
Rising underwater mortgages signal growing financial strain for homeowners and could affect broader housing market stability.
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