Homeowners insurance premiums experienced their largest single-year increase in over a decade, according to a new report. The average annual insurance premium for single-family homes added $276 to household expenses last year, bringing the total to $2,290. This data comes from ICE Mortgage Technology’s Mortgage Monitor report, which has tracked these metrics since 2013.
Homeowners insurance costs are climbing at a faster rate than other elements of mortgage payments. The 14% increase in insurance costs outpaces the 8% rise in interest rates and the 5% increase in property taxes.
The report also noted a rise in homeowners switching insurance carriers, increasing to 11.4% from 9.4%. Policy terms also became less favorable for mortgaged homeowners during the previous year. For new mortgages, the average deductible rose by $390 or 19% in 2024, and it was 44% or $736 higher than the equivalent for borrowers who have had the same home loan since 2014. Over the last three years, the average deductible for new mortgages increased by $571, or 31%. During the same period, for all outstanding home loans, the average deductible saw a $365, or 22%, increase.
Mortgage companies and insurers are in discussions with Fannie Mae and Freddie Mac, major government-sponsored loan buyers, about possibly relaxing minimum homeowners insurance standards. This flexibility could potentially allow consumers more negotiation power for lower premiums. However, Fannie and Freddie have raised concerns that if homeowners reduce their coverage to save money, they might face greater financial risks if a disaster strikes.
The issue of government regulation surrounding Fannie Mae and Freddie Mac is currently under scrutiny. At a recent confirmation hearing, private equity executive Bill Pulte, nominated for a key leadership position at the entities’ regulator, commented on the high cost of insurance, stating, “The FHFA is somewhat limited in terms of its jurisdiction… I will just make a general comment however that the cost of insurance is insane in this country.”
Recent wildfires have further complicated the situation. The report highlighted the impact of January’s wildfires in Southern California, which contributed to rising insurance costs and regional mortgage performance issues. The areas most affected by the Los Angeles fires—the Palisades and Eaton wildfire zones—have seen a notable increase in homeowners falling behind on their mortgage payments.
In the Palisades fire area, the percentage of delinquent homeowners reached 23.9% this month, a significant jump from 3.2% in January. The Eaton wildfire zone saw 16.7% of homeowners in arrears, up from 3.5% the previous month. Despite these localized changes, the data shows little variation in mortgage performance at the state or national levels.
