Consumers are reengaging with the mortgage market, signaling a return to normality in 2026, TransUnion said.

Mortgage originations rose 6.5% year over year to 1.3 million in the third quarter of last year, but at the same time, the percentage of borrowers 60 or more days delinquent increased to 1.51% in the fourth quarter, according to TransUnion's latest Credit Industry Insights Report.

Originations are viewed one quarter in arrears to account for reporting lag.

"What we're starting to see in the fourth quarter, as well as our outlook for 2026 for mortgage, is that it's starting to return to a more normal cycle," Michele Raneri, vice president of research and consulting at TransUnion, told National Mortgage News. 

New-origination levels have seesawed up and down over the last few years, but TransUnion expects it to steady this year, she added.

The report forecasted moderate growth in 2026 for mortgages, projecting purchases and refinances to increase 4% and 4.2% year over year, compared with 2.3% and 28.1% jumps in 2025.

Purchase mortgage volume climbed 4.2% annually and made up about 80% of all originations in the third quarter, slightly below last year's 82.1%. Rate-and-term refinances spiked 25.7% year over year, marking the eighth consecutive quarter of growth.

The surge in refinances was largely due to the 30-year fixed-rate mortgage slipping from 6.77% at the end of June to 6.26% by the middle of September. The 30-year rate is not expected to drop much more in the near future, but Raneri encouraged borrowers to stay active.

"Even if you've only had a mortgage for a short time, if the interest rate has decreased, you should chase that interest rate because you don't know when it's going to stop or when it could change in the other direction," she said. "If you refinance three times ... who cares?"

Home-equity originations increased 14.3% year over year to 714,000 in the third quarter, the sixth straight quarter of progress. Home equity lines of credit rose 15.8%, with Gen X and Baby Boomers accounting for the largest segments at 38% and 30%, while home equity loan volume jumped 12.9%, boosted by increased activity from Gen Z, according to the report.

Raneri said homeowners tapped into home equity in part due to cumulative inflation over the past few years and a need for more cash flow.

Delinquencies have edged up as well, marking the 15th consecutive quarter of increases. Federal Housing Administration loans continued to make up the largest share of delinquencies, while Department of Veterans Affairs loans recorded the fastest year over year growth in the fourth quarter.

But Raneri does not look at it as a cause for concern, as delinquencies were still below prepandemic levels.

"As we move through 2026, easing 30‑year mortgage rates should improve affordability for both buyers and refinancers," said Satyan Merchant, senior vice president, automotive and mortgage business at TransUnion, in a press release Thursday.

"We're seeing further signs of normalization as inventory reaches its most balanced levels in nearly a decade," Merchant added. "We're encouraged by the momentum created by falling rates, increased supply and strong equity positions. Overall, the outlook remains positive as long as stakeholders stay focused and responsive."