Warning: Undefined variable $custom_content in /home4/comcompare/public_html/mortgagenews/wp-content/plugins/code-snippets/php/snippet-ops.php(582) : eval()'d code on line 7
Last updated on July 11th, 2022 at 09:33 am
With record-low interest rates, mortgage volume for government-backed loans shot up to a new record high in the third quarter of 2020 whereas default risk continued to decrease.
Milliman Mortgage Default Index (MMDI) results showed that mortgage volume rose up by 125% year over year for loans backed by Freddie Mac and Fannie Mae due to strong mortgage demand.
In Q3 Refinance loans made up around 75% of GSE mortgage volume, while 50% of Ginnie Mae loans originated in the quarter showed 50% from refinancing.
Jonathan Glowacki, a principal at Milliman and author of the MMDI said that during the third quarter of 2020, mortgage refinances loans were so high, that the originators couldn’t keep pace with demand.
Glowacki said the historically low levels of borrower and underwriting risk were driven by the refi surge in Q4 2020 because low-risk refinance loans are easier and more efficient to underwrite compared with higher-risk loans.
Milliman’s mortgage default risk rate for GSE loans dropped to 1.50% in Q3 from 1.54% in Q2.
The interest rates kept falling and home prices improved. The MMDI rate for Ginnie Mae loans trickled down to 8.69% from 8.99% quarter over quarter.
Reference Source: MPA
