Mortgage default risk has reportedly reached a 3-year high according to a recent report from National Mortgage News. The spike has also been linked to a rise in mortgage originations, according to the report.
"With mortgage rates trending upward this year, the default risk index (a comparison of the total volume and weighted-average risk profile of quarterly originations) increased to 100.9 in the first quarter of 2018, a 5.63% growth year-over-year and 4.42% growth from the previous quarter," according to the NMN report.
"Lenders are showing more propensity to take on risk. The gradual loosening of credit is causing an escalation in mortgage originations as they increased 2.03% year-over-year in 2018's opening frame, but had a drastic decline of 18.15% from the final quarter of 2017."
Mortgage rates had stifled originations for quite some time however, the willingness to take on more risk has gradually turned that number around. Unfortunately, there have been a few negative effects. Unfortunately, mortgage applications dipped for the third week in a row.
According to Joel Kan, the MBA's associate vice president, the lack of homes on the market and buyers struggle with affordability, have impacted the number of mortgage applications, the NMN report continues.
To learn more about the increase in the risk of mortgage defaults, click on the image above.