MGIC INSURANCE IN FORCE GREW 7.08% TO 194.9 BILLION IN 2017 HELPED BY FHA
Mortgage insurers continue taking market share from FHA
By Brad Finkelstein
Private mortgage insurance continued to take market share from the Federal Housing Administration in 2017, with both products outpacing the growth in mortgage debt outstanding.
Total insurance-in-force for the MIs — which included the three companies no longer actively underwriting — grew 10.6% last year over 2016, according to a Keefe, Bruyette & Woods report.
FHA grew by 4.7% year-over-year.
Combined, insurance-in-force grew by 7.3% over 2016. Through the third quarter, mortgage debt outstanding increased at a 3% annualized rate over the previous year.
The higher rate of growth in loans using any MI products versus the overall market should continue for the foreseeable future, KBW said.
MI underwriters
FHA ended the year with $1.17 trillion of insurance-in-force, while the private companies had $1 trillion (the precrisis peak for private MI's IIF was $1.02 trillion at the end of 2008). This equates to a 53.8%/46.2% market share split. Just four years ago, FHA made up 60% of total IIF, while private MI had 40%.
The decision by the Trump administration to put a 25-basis-point cut in the FHA mortgage insurance premium on hold benefited the private MIs' share last year to some extent. However loans submitted to the private MIs typically have higher credit scores.
"We believe that private MI will continue to grow at a strong pace as the credit box continues to widen modestly and the PMIs continue to grow faster than the FHA," said the KBW report from analysts Bose George, Thomas McJoynt-Griffith and Eric Hagen.
"Further, increased persistency (assuming interest rates remain stable or trend up) should help support IIF growth rates."
Meanwhile, within the ranks of the six active private MIs, the expected market share shift away from Arch to the other players took place.
During 2016 Arch and United Guaranty, the company it acquired on the last day of that year, had a 26% pro forma share of new insurance written. For 2017, it had a 23% share; for the fourth quarter, Arch's share was 20.6%, with the dollar volume of NIW for the period only slightly above that posted by Radian. In the third quarter, Arch had a 22.8% share, while Radian had a 19.5% share.
National MI was another big gainer in share, going to 9.8% from 7.9% in the third quarter.
MGIC had the second largest market share in 2017 at 18.2%, followed by Essent at 16.3% and Genworth at 14.4%.
Brad Finkelstein
Brad Finkelstein is the originations editor of National Mortgage News.
Pending home sales increase for first time in three months
Published March 28 2018, 12:37pm EDT
More in Purchase Housing market Housing inventory Real estate NAR
A gauge of signed contracts to purchase previously owned homes increased in February for the first time in three months, highlighting uneven progress in the industry, according to data released Wednesday from the National Association of Realtors in Washington.
The index rose 3.1% month-over-month (the estimate was a 2% gain) after a downwardly revised 5% decrease. The gauge fell 4.4% year-over-year on an unadjusted basis after a 1.9% decline.
While the month-over-month gain shows demand for housing is still getting support from steady hiring, the market is facing several headwinds. Buyers are up against a persistent shortage of affordable listings to choose from, property prices continue to climb, and mortgage costs are rising. What's more, the Realtors group expects winter weather to weigh on demand in the Northeast.
Pending home sales
The NAR currently projects 2018 home sales will match 2017's 5.51 million. The group expects the median selling price of a previously owned home to increase around 4.2% this year after 5.8% in 2017.
"The expanding economy and healthy job market are generating sizeable home-buyer demand, but the miniscule number of listings on the market and its adverse effect on affordability are squeezing buyers and suppressing overall activity," Lawrence Yun, NAR’s chief economist, said in a statement.
"Homeowners are already staying in their homes at an all-time high before selling and any situation where they remain put even longer only exacerbates the nation’s inventory crunch," he said. The NAR's 2017 Profile of Home Buyers and Sellers showed the median tenure a homeowner stayed in their house before selling was 10 years, the highest in records back to 1981.
Purchases rose in all four regions last month, including a 10.3% jump in the Northeast and a 3% gain in the South. Economists consider pending sales a leading indicator because they track contract signings. Purchases of existing homes are tabulated when a deal closes, typically a month or two later.
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