MMDI

Milliman analysis: Mortgage default risk remains low despite continued affordability pressure

Retrieved on: 
Wednesday, March 13, 2024
Commercial Building & Real Estate, Construction & Property, Insurance, Finance, Professional Services, REIT, Fintech, Residential Building & Real Estate, Milliman, Risk, Pressure, Housing, Delinquent, MMDI

While mortgage delinquency risk increased to 2.71% for loans acquired in Q4 2023, compared to 2.62% for loans acquired during Q23 2023, delinquency risk remains low despite pressure on housing affordability.

Key Points: 
  • While mortgage delinquency risk increased to 2.71% for loans acquired in Q4 2023, compared to 2.62% for loans acquired during Q23 2023, delinquency risk remains low despite pressure on housing affordability.
  • Looking at the components of default risk between 2023 Q3 and Q4, borrower risk remained level at 1.48%, with purchase loans making up about 88% of total volume.
  • Underwriting risk, which represents additional risk adjustments for property and loan characteristics, remains low and is negative for purchase mortgages.
  • “Mortgage underwriting remains strong, despite the interest rate-environment and continued home price appreciation putting pressure on housing affordability,” said Jonathan Glowacki, a principal at Milliman and co-author of the MMDI.

Milliman analysis: Mortgage default risk increases slightly alongside decrease in home price appreciation

Retrieved on: 
Tuesday, December 5, 2023
Finance, Consulting, Professional Services, Residential Building & Real Estate, Construction & Property, MMDI, Milliman, Risk, GSE, Credit

Milliman, Inc., a premier global consulting and actuarial firm, today announced the third quarter (Q3) 2023 results of the Milliman Mortgage Default Index (MMDI), which shows Milliman’s latest monthly estimate of the lifetime default risk of U.S.-backed mortgages.

Key Points: 
  • Milliman, Inc., a premier global consulting and actuarial firm, today announced the third quarter (Q3) 2023 results of the Milliman Mortgage Default Index (MMDI), which shows Milliman’s latest monthly estimate of the lifetime default risk of U.S.-backed mortgages.
  • Mortgage default risk increased to 3.10% for loans acquired in Q3 2023, compared to 3.03% for loans acquired during Q2 2023.
  • A projected decrease in home price appreciation has caused the slight increase in default risk for 2023 Q3.
  • Looking at the components of default risk over 2023 Q3, the economic risk for GSE loans increased quarter over quarter, from 1.54% in 2023 Q2 to 1.64% in 2023 Q3.

Milliman analysis: Mortgage origination volume returns to pre-pandemic levels in Q2 2023 while default risk declines slightly

Retrieved on: 
Wednesday, September 13, 2023
Freddie Mac, Milliman, GSE, MMDI, Fannie Mae, Credit, Real estate, Q2, Freddy

SEATTLE, Sept. 13, 2023 /PRNewswire/ -- Milliman, Inc., a premier global consulting and actuarial firm, today announced the second quarter (Q2) 2023 results of the Milliman Mortgage Default Index (MMDI), which shows Milliman's latest monthly estimate of the lifetime default risk of U.S.-backed mortgages.

Key Points: 
  • Mortgage originations for both refinance and purchase loans are in line with 2019, similar to volume we saw pre-pandemic
    Mortgage default risk declined to 3.02% for loans acquired in Q2 2023, compared to 3.12% for loans acquired during Q1 2023.
  • Interestingly, the default risk for government-sponsored enterprise (GSE) acquisitions (purchased and refinanced loans backed by Freddie Mac and Fannie Mae) did not follow typically observed patterns during Q2.
  • The default risk for Freddie acquisitions increased from 3.04% to 3.09% due to an increase in borrower risk, whereas the default risk for Fannie acquisitions decreased from 3.17% to 2.96% due to a decrease in borrower risk.
  • But because Fannie Mae had a greater volume of acquisitions in Q2 2023 – mostly purchase loans – the default risk for GSEs decreased overall by ten percentage points.

Milliman analysis: Mortgage originations decrease 73% year-over-year in Q1 2023; mortgage default risk declines slightly

Retrieved on: 
Thursday, June 1, 2023
Freddie Mac, Milliman, MMDI, Environment, Risk, Fannie Mae, GSE, Credit, Real estate, Bank

SEATTLE, June 1, 2023 /PRNewswire/ -- Milliman, Inc., a premier global consulting and actuarial firm, today announced the first quarter (Q1) 2023 results of the Milliman Mortgage Default Index (MMDI), which shows Milliman's latest monthly estimate of the lifetime default risk of U.S.-backed mortgages.

Key Points: 
  • Mortgage originations for Q1 2023 were at their lowest levels since 2019, with refinance originations at their lowest levels since 2014, when Milliman started tracking this data.
  • This is the fifth consecutive quarter that mortgage originations have decreased and represents a 73% decrease in mortgage origination volume year-over-year.
  • Looking at the components of default risk, borrower risk remained steady in Q1 2023, while there was a slight decrease in overall economic risk between Q4 2022 and Q1 of this year.
  • "Because cash-loans are assigned a greater default risk, they continue to drive up overall risk for refinance originations in Q1."

Milliman analysis: Mortgage default risk remained flat at 2022 year-end; Mortgage originations at lowest levels since 2019

Retrieved on: 
Wednesday, March 8, 2023
MMDI, Fannie Mae, Freddie Mac, GSE, Risk, Milliman, LTV, FICO, Credit

SEATTLE, March 8, 2023 /PRNewswire/ -- Milliman, Inc., a premier global consulting and actuarial firm, today announced the fourth quarter (Q4) 2022 results of the Milliman Mortgage Default Index (MMDI), which shows the latest monthly estimate of the lifetime default risk of U.S.-backed mortgages.

Key Points: 
  • Between the third quarter (Q3) and Q4 2022, default risk for government-sponsored enterprise (GSE) acquisitions (purchased and refinanced loans backed by Freddie Mac and Fannie Mae) remained steady at 3.53%.
  • For Q4, mortgage originations are at their lowest levels since 2019 (pre-pandemic) with refinance originations at their lowest levels since 2014, when Milliman started tracking this data.
  • Looking at the components of default risk, borrower risk decreased from 1.61% in Q3 2022 to 1.57% in Q4.
  • Economic risk inched up from 1.90% in 2022 Q3 to 1.96% in 2022 Q4 overall, though newer originations may face a steeper increase.

Milliman analysis: Rising interest rates, lower refinance activity contribute to growing mortgage default risk in 2022 Q3

Retrieved on: 
Friday, December 2, 2022
Milliman, Fannie Mae, Freddie Mac, City, MMDI, GSE, Real estate, Q3

SEATTLE, Dec. 2, 2022 /PRNewswire/ -- Milliman, Inc., a premier global consulting and actuarial firm, today announced the third quarter (Q3) 2022 results of the Milliman Mortgage Default Index (MMDI), which shows the latest monthly estimate of the lifetime default risk of U.S.-backed mortgages.

Key Points: 
  • This means that for mortgage loans originating in Q3, the expectation is that 3.54% will become delinquent (180 days or more) over their lifetimes.
  • Rising interest rates during Q3 had a large impact on the mortgage market, with a 62% drop in mortgage originations year over year.
  • For both purchase and refinance loans, increased economic risk due to an expected slowdown in home price growth is also driving the rise in default risk.
  • That, plus increasing economic risk associated with an expected slowdown in home price growth, are contributing to the increased mortgage default risk we're seeing."

Milliman analysis: Mortgage risk rate continues to increase in Q2 2022 with heavy cash-out refinance volume

Retrieved on: 
Thursday, September 1, 2022
Milliman, City, Fannie Mae, GSE, Leadership, MMDI, Freddie Mac, Real estate

SEATTLE, Sept. 1, 2022 /PRNewswire/ -- Milliman, Inc., a premier global consulting and actuarial firm, today announced the second quarter (Q2) 2022 results of the Milliman Mortgage Default Index (MMDI), which shows the latest monthly estimate of the lifetime default risk of U.S.-backed mortgages.

Key Points: 
  • This means that for mortgage loans originating in Q2, the expectation is that 2.78% will become delinquent (180 days or more) over their lifetimes.
  • The volume of refinance mortgages continued to decline in Q2 2022 compared to Q1, likely the result of increasing interest rates.
  • Mortgage refinance volume has dropped steadily since its all-time high in 2021, when interest rates were at historic lows.
  • Cash-out refinance loan volume increased from 34% of all refinance originations in 2021, to 74% in Q2 2022.

Milliman analysis: Expected slowdown in home price growth driving uptick in mortgage risk in Q1 2022

Retrieved on: 
Tuesday, August 2, 2022
Milliman, Freddie Mac, GSE, Fannie Mae, Leadership, Risk, MMDI, City, Credit, Real estate

SEATTLE, Aug. 2, 2022 /PRNewswire/ -- Milliman, Inc., a premier global consulting and actuarial firm, today announced the first quarter (Q1) 2022 results of the Milliman Mortgage Default Index (MMDI), which shows the latest monthly estimate of the lifetime default risk of U.S.-backed mortgages.

Key Points: 
  • During Q1 2022, the default risk for government-sponsored enterprise (GSE) acquisitions (purchased and refinanced loans backed by Freddie Mac and Fannie Mae) increased from 1.90% at 2021 year-end to 2.39% as of March 31, 2022.
  • This means that for loans originating in Q1, the expectation is that 2.39% will become delinquent (180 days or more) over their lifetimes.
  • "Combined with inflation, we're anticipating a slowdown in home price growth, which is what's driving the uptick in mortgage default risk."
  • GSE mortgage originations continued to decline over Q1 2022 compared to the fourth quarter of 2021.

Milliman analysis: Default risk for U.S.-backed mortgages increases in Q4 2021, driven by expected slowdown in home price growth

Retrieved on: 
Thursday, March 10, 2022
GSE, Milliman, Leadership, Fannie Mae, City, MMDI, Freddie Mac, Credit, Real estate, Insurance

"While U.S. mortgage default risk is still quite low, we've seen it tick upward," says Milliman's Jonathan Glowacki.

Key Points: 
  • "While U.S. mortgage default risk is still quite low, we've seen it tick upward," says Milliman's Jonathan Glowacki.
  • During Q4 2021, the default risk for government-sponsored enterprise (GSE) acquisitions (purchased and refinanced loans backed by Freddie Mac and Fannie Mae) increased to 1.98%, from 1.65% the previous quarter.
  • This means that for loans originating Q4 2021, we expect nearly 2% to become delinquent (180 days or more) over their lifetimes.
  • "While U.S. mortgage default risk is still quite low, we've seen it tick upward as economic forecasts anticipate a slowdown in home price growth," says Jonathan Glowacki, a principal at Milliman and author of the MMDI.

Milliman analysis: Default risk for U.S.-backed mortgages increases in Q2 2021, driven by fewer refinance loans, increased borrower risk

Retrieved on: 
Friday, November 19, 2021
Freddie Mac, Government National Mortgage Association, Fannie Mae, MMDI, Q2, GSE, Leadership, COVID-19, Housing, Milliman, City, Pharmaceutical industry, Bank

During Q2 2021, the default risk for government-sponsored enterprise (GSE) acquisitions (purchased and refinanced loans backed by Freddie Mac and Fannie Mae) increased, from 1.20% in Q1 2021 to 1.48% for acquisitions originating in Q2 2021.

Key Points: 
  • During Q2 2021, the default risk for government-sponsored enterprise (GSE) acquisitions (purchased and refinanced loans backed by Freddie Mac and Fannie Mae) increased, from 1.20% in Q1 2021 to 1.48% for acquisitions originating in Q2 2021.
  • For Ginnie Mae loans, the MMDI rate also increased from 7.41% to 8.75% during the same time period.
  • While purchase loans remained strong during Q2, a rise in interest rates led to 30% fewer refinance loans, which are typically viewed as lower-risk.
  • "We've been seeing default risk climb throughout the first half of 2021, driven primarily by increased economic and borrower risk for new purchase loans," says Jonathan Glowacki, a principal at Milliman and author of the MMDI.