The 2026 Borrower Escrow Survey

In 2026, 60% of borrowers whose mortgage payment went up were surprised by the change, even as more homeowners say they understand how escrow works.

Source: LERETA 2026 Borrower Escrow Survey · n=1,037 homeowners

Executive Summary

Homeowners feel more confident about escrow than they did a year ago. Fewer of them are prepared for what it does to their monthly payment.

In our third annual Borrower Escrow Survey, 61% of homeowners said they completely understand how a mortgage escrow account works, a slight rise from 60% the year before. Underneath that steady number, the confusion that matters most to servicers is getting worse. Nearly two in five borrowers still believe a fixed-rate mortgage means a fixed payment, and among borrowers who saw their payment rise, 60% were surprised, up from 55% in 2025.

The pressure behind those increases is not letting up. Property taxes were the most common driver, cited by 62% of borrowers with an increase, followed by homeowners insurance at 48% and flood insurance at 21%. For many households, the stakes are immediate: 47% said a 10% payment increase would be a hardship, and 40% said they could not handle a 25% increase at all.

Servicer communication is working when it happens. Seventy percent of borrowers said their mortgage company had explained how rising taxes or insurance could change their payment, up sharply from 56% a year ago. Seventy-eight percent said their servicer communicates clearly about escrow. Borrowers want more of it, and they want it where they already are: 72% said it would be very helpful to see their property tax status inside their mortgage website or app.

Three surveys in, the conclusion is the same. Escrow surprises are a communication and timing problem, and they are solvable with earlier, clearer outreach backed by current data.

01

Methodology

The 2026 Borrower Escrow Survey is LERETA's third annual study of homeowner understanding of mortgage escrow accounts and the impact of rising property taxes and insurance premiums on monthly mortgage payments. The survey was conducted in December 2025 among 1,037 U.S. homeowners who had purchased or refinanced their home between 2021 and 2025, all of whom carry an escrow account. Findings were released February 10, 2026.

Respondent profile: The sample skewed toward established working-age homeowners. Ages ranged from 25 to 60+, with the largest concentration in the 40–49 bracket (36%) and roughly two-thirds of respondents between 30 and 49. The sample was 54% male and 46% female. All respondents reported household income of $60,000 or more, distributed roughly evenly across four income bands up to $151,000+. Education was high: 72% hold at least a four-year degree. Regionally, the Southeast (28%) and Northeast (26%) were most represented, followed by the Midwest (21%), West (17%), and Southwest (9%). Purchase and refinance years ranged from 2021 to 2025, with the largest share (36%) having purchased or refinanced in 2021.

A note on year-over-year comparability: this survey was limited to homeowners who purchased or refinanced between 2021 and 2025. Prior editions used different population parameters, and some question wording was revised between editions. Both factors are noted where they affect direct comparability. The fixed-rate misconception question was reworded in 2026 to include the qualifier "and an escrow account"; prior-year figures for that item are not directly comparable and are excluded from the year-over-year table.

02

Key Findings

Almost Everyone Knows Taxes. Not Everyone Knows Insurance.

Source: LERETA 2026 Borrower Escrow Survey

Almost every borrower knows escrow pays their property taxes, and that share rose from 91% last year. Insurance is less certain: 85% connect escrow to homeowners or flood insurance, leaving a meaningful share unaware of a cost that is rising sharply. The gap matters because insurance is where some of the largest increases are landing right now. When a borrower who only associates escrow with taxes sees a jump tied to an insurance premium, the increase feels unexplained, and an unexplained increase becomes a complaint. Naming both drivers plainly, before the analysis posts, removes a surprise that borrowers are otherwise primed to misread.

Confidence Holds Steady, but a Core Misconception Is Growing

39% still believe a fixed-rate mortgage means a fixed monthly payment.

Source: LERETA 2026 Borrower Escrow Survey

Sixty-one percent of borrowers say they completely understand how escrow works, a number that has held firm for two years. The gap is in what that confidence actually covers. More than nine in ten respondents (95.5%) said they are at least somewhat aware that escrow changes can affect their monthly payment. Yet 39% still answered true to the statement that a fixed-rate mortgage and an escrow account means their total payment cannot change. Borrowers understand the concept in the abstract; they don't apply it to their own situation. That gap is where the surprise lives, and it is not closing on its own.

A related finding reinforces the picture: 45% of respondents believe home value directly affects their monthly mortgage payment, which is not how a fixed-rate mortgage with escrow works. The misconceptions borrowers carry are specific, and they point to the same underlying assumption: that fixed means fixed. Resetting that expectation before the escrow analysis posts is more effective than explaining the math after the statement arrives.

Payment Increases Are Widespread, and Still Catching People Off Guard

Source: LERETA 2026 Borrower Escrow Survey

Surprise is rising even as understanding holds steady, which tells us awareness alone is not preventing the shock. Among borrowers who saw a payment increase, 62% pointed to higher property taxes, 48% to homeowners insurance, and 21% to flood insurance. More than a quarter (26%) cited interest rate changes. The drivers are familiar, but they are stacking, and each one arrives without much warning for the borrower. The pattern is the clearest signal in this year's data: the problem is not that borrowers reject the information, it's that they receive it too late, in a statement, after the change is already in effect. Earlier notice changes the experience from a surprise into a heads-up.

For Many Households, a Larger Increase Would Break the Budget

40% could not handle a 25% payment increase.

Source: LERETA 2026 Borrower Escrow Survey

Escrow increases are not an abstraction for a large share of borrowers. Nearly half said even a 10% rise in their monthly payment would be a hardship, 47%, and 15% said they could not handle a 10% increase at all. Raise the figure to 25%, and 40% said they could not manage it. These numbers reframe what an escrow analysis means to the person receiving it. A routine annual adjustment on the servicer's side can be a genuine financial threat on the borrower's side, and that mismatch is where frustration, delinquency risk, and churn begin. Servicers who can flag a sizable increase early give borrowers the one thing the data says they need most: time to prepare.

Communication Is Improving, and Borrowers Want More of It

Source: LERETA 2026 Borrower Escrow Survey

Proactive communication jumped 14 points in a year, and 78% of borrowers now say their mortgage company communicates clearly about escrow. The effort is landing. Nearly three in ten borrowers, 29%, say they have never been contacted about their escrow account. Among the 57% who reached out to their servicer with questions, 96% found the interaction helpful. The service quality is there when the call happens. The opportunity is in getting ahead of that call.

Borrowers consistently ask for more detail and earlier notice, and the satisfaction data backs them up. The lesson is not to communicate more often for its own sake, but to communicate at the right moment, before the change posts, with the specific number and the specific reason. Servicers who pair timing with plain explanation are the ones moving these numbers.

Borrowers Want Escrow Visibility Inside the Tools They Already Use

72% want to see their property tax status on their mortgage website or app.

Source: LERETA 2026 Borrower Escrow Survey

Borrowers are telling servicers where to put the answer. Nearly three quarters said it would be very helpful to see the amount and status of the property tax bill being paid from escrow right inside their mortgage portal or mobile app. The request is practical: people want to check their own account without making a call or waiting for a statement. For servicers, it meets a clear borrower demand and deflects the inbound questions that escrow changes generate. The data borrowers are asking to see is the same data servicers already manage. Surfacing it is a matter of connecting it to the screen the borrower is already looking at.

03

Year-over-Year Trends

The value of this study builds with every edition. Three surveys in, the numbers on several key measures are moving in a consistent direction.

Three-Year Track

Sources: LERETA 2024 Escrow Awareness Survey (Feb. 2024) · 2025 Escrow Awareness Survey (Jan. 2025) · 2026 Borrower Escrow Survey (Feb. 2026)

Two-Year Track (first measured in 2025)

Sources: LERETA 2025 Escrow Awareness Survey · 2026 Borrower Escrow Survey

Across three years, the most consistent signal is surprise at payment increases rising even as servicer communication improved sharply. Both are moving, but in opposite directions. The gap is timing: borrowers hear from servicers, but not early enough to absorb the change before it posts. The jump in proactive communication, up 14 points from 2025 to 2026, is proof that when servicers act on this data, it reaches borrowers. The direction is clear; the work is in closing what remains.

04

What This Means for Servicers

The survey describes borrowers. The implications are for the teams who serve them.

For VPs of Lending and growth leaders. Escrow experience is a retention lever. Borrowers who are surprised by a payment increase report markedly lower satisfaction than those who saw it coming. In a market where servicing portfolios move and refinancing windows open without much notice, the servicer who handles escrow changes with clarity holds the relationship. Getting this right is a competitive edge, not a back-office detail.

For operations and loan servicing managers. Sixty percent of borrowers with a payment increase didn't see it coming, and they're calling your team to find out why. Nearly three in ten have never been contacted about their escrow. The fix is timing: reach borrowers before the analysis posts, name the driver, give the number. Borrowers told us where they want the information, with 72% asking to see tax status inside the app or website. Meeting that request deflects the inbound before it reaches your team.

For COOs and CFOs. Escrow confusion carries real cost: complaint handling, staff time, delinquency risk, and churn. Earlier, accurate communication backed by current tax and insurance data carries measurable return at relatively low cost. When borrowers do call, 96% find the interaction helpful. The investment is in moving that quality upstream, not in adding headcount.

About the Research

LERETA has provided real estate tax and flood data to the mortgage industry since 1986. We conduct the annual Borrower Escrow Survey because escrow is where rising tax and insurance costs reach the homeowner first, and because the servicers we work with need a clear, current read on what borrowers understand and where they get tripped up. The findings inform how we help servicers communicate escrow changes earlier and more clearly. Explore our other research and resources.

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