![]() Investors have “reduced their willingness to purchase jumbo loans and also raised credit requirements,” he noted in the group’s report. That growth streak ended last month,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association, in a press release. “Prior to last month, there were six months of increasing jumbo credit supply, driven by strong demand, rapid home-price appreciation, and the overall strength in the economy. Some positive economic signs bode well for mortgage performance and credit, but experts are wary of some mixed indicators they’ve seen in the market and both the MBA and S&P/Experian recent reports suggest increased hesitancy on the part of lenders. could default on its unpaid debts all 31.4 trillion of it and face negative economic and financial effects if the ceiling isn’t raised. While the latest reading on the MBA’s index (124.8) was the lowest seen since last August, it’s still well above the benchmark reading of 100 that corresponds to March 2012, a period after the Great Recession when housing credit was unusually tight. Extensive model simulations show that an increase in expected future house prices leads to a decline in mortgage default rates as well as in interest rates on. Similar to defaulting on a consumer loan, the U.S. Lenders are seeking to open up their credit boxes to non-qualified mortgages and other products in order to make up refinancing volumes lost due to diminished rate incentive, but they’ll be watching loan performance closely in making decisions about whether to do so. The recent increase in the first-mortgage default rate has been somewhat in line with broader trends in consumer finance performance as measured by the S&P and Experian. The latest reading on the Mortgage Bankers Association’s monthly credit availability index, which analyzes data from industry vendor ICE Mortgage Technology, registered a slight contraction of 0.9% in January compared to the previous month. The higher numbers for initial default rates, combined with upward pressure on interest rates from inflation and federal monetary policy, could be of concern to both servicers handling the payments of existing mortgagors and lenders trying to size up a new borrowers’ ability to repay. The latter climbed by 4 basis points to 0.53%. Rate rise default risk As interest rates rise, almost 300,000 people who took large and risky home loans during the pandemic could fall into severe financial hardship or even default. The former jumped by 7 basis points to 2.02%. Default rates for bank cards and auto loans increased more markedly during January. The composite default rate for consumer finance also rose 3 basis points from December to 0.43%. “Although I’m not fond of this phrase, I think it has kind of helped prevent the ‘foreclosure tsunami’ everyone was worried about.The recent increase in the first-mortgage default rate has been somewhat in line with broader trends in consumer finance performance as measured by the S&P and Experian. ![]() “Servicers have told me how useful the homeowner assistance fund has been and that’s pretty much been rolled out in all the states now,” Richard Koch, structured finance director at Fitch, said in an interview. A couple of states, like Illinois and Alaska, have closed their programs, but most remain active, according to the National Council of State Housing Agencies. The fund contains more than $9.96 billion that the majority of states have available to distribute to distressed homeowners for mortgages and other housing needs. In addition to modifications, money available from the Homeowner Assistance Fund has been limiting default risk. Consumers are often quicker to default on bank cards or loan products secured by second liens than first mortgages. The default rate for bank cards was 2.55%. The default rate for home equity loans and lines of credit in June was 0.45%. ![]() Both increased 6 basis points compared to May, suggesting an uptick in short-term consumer distress during the month. However, June’s jump in the default rates for second mortgages and bank cards was more pronounced. The auto loan default rate rose by only a basis point from May to 0.62%. So far the composite default rate that serves as a broader indicator of consumer distress has followed a similar path as the mortgage indicator, rising 2 basis points to 0.53% in June. “If economic conditions deteriorate, there will likely be negative implications for homeowners,” Thompson said in testimony before the House Committee on Financial Services, noting that post-forbearance relief like modifications of loan terms for affordability purposes remain available. High home equity levels have insulated many people from the small uptick in default risk, but if rising consumer costs start to affect the economy, it could become more of a concern, Federal Housing Finance Agency Director Sandra Thompson said Wednesday.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |