The Rise in Property Taxes and Insurance is Causing Some North Carolinains to Fall Behind on their Mortgages

The rapid rise in property taxes and homeowners insurance across North Carolina is quietly driving up monthly mortgage payments, making it harder for many homeowners to stay current and pushing some into delinquency. As escrow costs swell—especially in metros like Raleigh—families who budgeted for a “fixed” mortgage are discovering that their total payment is anything but fixed.

One key driver is the sharp increase in escrow—the portion of a mortgage payment set aside for taxes and insurance—rather than the loan’s principal and interest. Recent research shows that escrow now makes up about 29% of the average monthly mortgage payment in North Carolina, and the amount paid into escrow has surged by roughly 56% since 2019. This means nearly one‑third of what homeowners send to their lender each month goes to tax bills and insurance premiums instead of paying down the mortgage balance, leaving less room in household budgets for other expenses. When lenders conduct annual escrow reviews and adjust for higher tax and insurance costs, homeowners can see sudden jumps in their total payment—even though their interest rate has not changed.

Rising insurance premiums are another major pressure point, especially in and around Raleigh and other growing markets. Data from the Raleigh metro area show that insurance costs climbed from about 6.5% to 8.8% of the typical mortgage payment over the past decade, meaning a growing share of each payment is swallowed by insurance rather than the loan itself. At the same time, North Carolina’s Rate Bureau sought an average 42% homeowners insurance rate hike, and even after negotiation the state approved base rate increases of 7.5% in both 2025 and 2026, with additional increases on dwelling policies also in the pipeline. These higher premiums reflect more frequent severe weather and rising rebuilding costs, but for homeowners they often translate directly into larger escrow requirements and unexpectedly higher monthly payments.

Property taxes are rising alongside insurance, and together they compound the strain on homeowners’ ability to stay current. After years of strong home price appreciation, tax assessments have caught up, leading to higher tax bills even where nominal tax rates have fallen or stayed relatively stable. In fast‑growing counties, larger local budgets for schools, infrastructure, and services further push tax levies upward, and these increases flow straight into escrow calculations. For some North Carolina homeowners—particularly retirees on fixed incomes or families who bought at the edge of what they could afford—these combined jumps in taxes and insurance can push their total payment beyond what their monthly income can comfortably support, increasing the risk of missed payments and mortgage delinquency.

Altogether, this environment means that even without new borrowing or higher interest rates, many North Carolina homeowners are facing mounting housing costs that make it easier to fall behind on their mortgages. As taxes and insurance eat up a larger share of each payment, the predictability borrowers expect from a “fixed‑rate” loan erodes, and any financial setback—job loss, medical bill, or unexpected repair—can quickly tip a household into delinquency. Unless tax and insurance cost growth moderates or incomes rise enough to keep pace, more homeowners across the state are likely to struggle with their mortgage obligations, underscoring how non‑loan expenses have become central to the true cost of owning a home in North Carolina.