Property-insurance premiums rise a record amount

The jump in borrowers' homeowners-insurance premiums last year was the largest seen in over a decade, according to a new report.

The average annual insurance-premium for single-family homes added $276 to household bills last year, when the typical borrower paid $2,290 for the coverage, ICE Mortgage Technology found. 

"That's the largest single-year increase on record dating back to 2013 when ICE began tracking the metric," the company said in its Mortgage Monitor report.

Homeowners insurance costs also are rising faster than any other component of consumers' rising mortgage payments at 14% compared to 8% for interest and 5% for property taxes.

In addition, the share of property owners who changed insurance carriers last year jumped to 11.4% from 9.4%.

Policy terms also became less favorable for mortgaged homeowners during the previous year.

The average deductible for new mortgages 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. 

The average deductible for new mortgages was up $571 or 31% over the past three years. For outstanding home loans, the average deductible rose $365 or 22% over the same period.

Mortgage companies and insurers have been in discussions with major government-sponsored loan buyers Fannie Mae and Freddie Mac over whether the two investors would be willing to make their minimum homeowners insurance standards more flexible to give consumers more leeway to negotiate lower premiums. Fannie and Freddie have shown concern homeowners could be exposed to more risks in the event of a disaster if they chose to skimp on coverage to lower costs.

The Trump administration is considered more likely to reduce Fannie and Freddie's government ties and regulation than its predecessor. The Senate Banking Committee held a confirmation hearing for private equity executive Bill Pulte to fill a key leadership position at the two government-sponsored enterprise's regulator on Thursday.

"The FHFA is somewhat limited in terms of its jurisdiction," he said during the hearing. "I will just make a general comment however that the cost of insurance is insane in this country."

Wildfires in Southern California during January have added to both insurance costs and regional mortgage performance issues recently.

The Mortgage Monitor report, which delves more deeply into numbers reported earlier, also provided some additional insight into what the ripple effects of the fires have been this month.

The percentage of homeowners in arrears in the two areas hit hardest by the Los Angeles fires experienced large increases during February, according to the report.

So far one-fourth or 23.9% of the property owners in the Palisades fire area have gone delinquent this month, compared to 3.2% in January. In the Eaton wildfire zone, 16.7% have been in arrears to date this month, up from 3.5% a month ago.

While the change in noncurrent percentages was striking locally, consecutive month performance has experienced little variation on a state or national level so far.