According to Milliman, Inc.’s Q4 2024 results of the Milliman Mortgage Default Index (MMDI), the lifetime significant delinquency rate (for residences that are 180 days or more past due) for U.S.-backed mortgages has somewhat decreased.
After restating to 2.18% in Q3, the Q4 2024 MMDI fell to 2.12%.
The decline in default risk in Q4 2024 is a result of persistently strong borrower profiles, which include lower average loan-to-value (LTV) ratios for the quarter and somewhat higher average FICO scores. Because there were fewer cash-out refinance loans and purchase loans had better credit characteristics, borrower risk dropped from 1.46% in Q3 2024 to 1.39% in Q4.
Experts Weigh In:
“Even with the slight decline in default risk this quarter, it’s important to consider how evolving economic uncertainty can impact mortgage performance,” said Jonathan Glowacki, Principal at Milliman and Co-Author of the MMDI. “Mortgages are long-duration contracts, and economic events can impact both new mortgages and seasoned mortgages. We will continue to monitor loan performance to evaluate how policy decisions and regulatory changes are impacting the mortgage market.”
The Q3 2024 MMDI statistics have been corrected from 2.12% to 2.18% to reflect lower-than-expected home price appreciation, as you can see when examining Q3 to Q4 movements. The MMDI is based on a baseline estimate of future home prices, and its values are updated in later releases to reflect changes in projections and actual circumstances.
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