Mortgage default risk has remained generally consistent for Freddie and Fannie acquisitions, down from 3.53% to 3.44% quarter over quarter. This brings the share of loans likely to be delinquent (180 days or more) to 3.44%.
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Looking at borrower risk, GSE-backed loans remained relatively unchanged at 1.58%, with purchase loans making up about 87% of total originations compared to 83% last quarter. Underwriting risk stayed low and was negative for purchase mortgages, though the rising interest-rate environment affected refinance originations.
“With interest rates increasing, only 30% of refinance loans were rate/term refinance for the most recent quarter. This compares to 40% in the year prior,” said Jonathan Glowacki, a principal at Milliman and co-author of the MMDI. “Because cash loans are assigned a greater default risk, they continue to drive up overall risk for refinance originations in Q1.”
There was also a slight drop in economic risk, down to 1.87% in the first quarter.
Source: mpamag.com