New analysis underscores strong underwriting and steady borrower risk as key stabilizers
New analysis from Milliman has found that the risk of mortgage default in the US remains relatively low, even amid ongoing challenges related to housing affordability.
According to the latest Milliman Mortgage Default Index (MMDI), mortgage delinquency increased to 2.71% for US-backed loans acquired in the fourth quarter of 2024.
However, this increase represented only a slight uptick from the previous quarter, when delinquency risk for loans acquired during the period sat at 2.62%.
Milliman attributed this uptick to the expected slowdown and minor decline in home price appreciation in some markets.
But even with the increase, the analysis maintained that the overall risk of mortgage default remains low, citing components of default risks between Q3 to Q4 2023.
In its index, Milliman found that borrower risk has stayed steady at 1.48%, with purchase loans constituting approximately 88% of the total loan volume.
Underwriting risk, which accounts for additional risk factors associated with property and loan characteristics, also continued to be low and even negative for purchase mortgages.
Meanwhile, economic risk, which assesses the potential impact of historical and projected home prices, only grew slightly from 1.16% in Q3 to 1.24% in Q4 2023.
“Mortgage underwriting remains strong, despite the interest rate-environment and continued home price appreciation putting pressure on housing affordability,” said MMDI co-author and Milliman principal Jonathan Glowacki.
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