Mortgage default risk is on the rise!

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The following flash release about mortgage default risk was published by AEI’s HousingRisk.org!

Mortgage risk increased as the NMRI hit a new series high, due to an increase in FHA’s market share and loan level risk.

AEI’s National Mortgage Risk Index for home purchase loans hit a new series high of 11.89 percent for April, up from 11.50 percent in March.  The increase was due to FHA, which had higher market share and increasing loan level risk.  The FHA’s April home purchase volume was 41,756, an increase of 36 percent over March.  By contrast Fannie Mae and Freddie Mac had April home purchase volume of 101,050, an increase of 24 percent over March and down 4 percent from the same month last year.

Overall, April purchase volume was up 27 percent over March, the result of the spring buying season ramping up.

The April NMRI for FHA loans also hit a new series high of 25.12 percent up from 24.77 percent in March.

The April NMRI for Fannie Mae and Freddie Mac loans declined slightly to 5.93 percent from 6.00 percent in March.

The NMRI score is an objective and transparent mortgage risk measure. It represents an estimated cumulative default rate for new home purchase loans under the assumption of stress conditions from 2007-2012.   An overall index level of less than 6 percent is indicative of conditions conducive to a stable national market. (Source)

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