Mortgage delinquency risk increased from 2.03% in the second quarter of 2024 to 2.12% for loans acquired in the third quarter, driven primarily by the projected slowing of home price appreciation, according to consulting and actuarial firm Milliman.
Borrower risk for Q3 2024 remained nearly level, decreasing from 1.47% to 1.46%, with less-risky purchase loans continuing to make up the bulk of originations, at about 82% of total volume, according to the Milliman Mortgage Default Index. The volume for rate/term and cashout refinance loans was approximately $16 billion each ($32 billion total for refinance loans).
“For the first time in nearly three years, default risk on refinance loans is equal to or less than the default risk for purchase loans,” said Jonathan Glowacki, a principal at Milliman. “With the volume of relatively lower-risk rate/term refinance and higher-risk cash-out refinance loans equaling each other, the default risk for these loans ended up averaging out to a similar default risk rate as purchase loan originations.”
