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The Week Ahead: A Look Loan Risk for Buyers

On Monday, the American Enterprise Institute (AEI) will host a conference call on its First-Time Buyer Mortgage Share and Mortgage Risk Indices for November 2016.  These housing market indicators are based on monthly data for nearly all government-guaranteed home purchase loans.

The November 2016 data saw a 31 percent spike in first-time buyer (FTB) loan volume. Compared to November 2015, agency FTB share was up by 2.5 percentage points, while volume was up 39 percent.

The first-time buyer mortgage risk index (FBMRI) for agency purchase loans stood firm at 16.0 percent in November 2016, and was up a marginal 0.3 ppt. from November 2015.

The agency FBMRI is 6.6 ppts. Higher than the repeat buyer MRI. The gap has widened 0.6 ppt. from a year earlier.

“First time home buyers are taking on additional risk to keep up with rapidly rising home prices,” noted Edward Pinto, Co-Director of AEI’s International Center on Housing Risk. “Thus, there is a yawning gap between the growing risk level for first time buyer loans and much lower and stable risk levels for repeat buyers,” Pinto added.

Tobias Peter, Senior Research Analyst for AEI's Center on Housing Risk, stated, “After having paused for the last couple months, credit easing, especially for first-time buyers, has resumed with FHA leading the way. We expect this trend to continue as looser lending is used to help first-time buyers offset higher cost from rising mortgage rates and housing prices alike.”


Upcoming News for Monday, February 27

S&P Corelogic Case-Shiller HPI — 9:00 a.m. ET

Pending Home Sales Index — 10:00 a.m.  ET

First-time Buyer, Mortgage Share and Mortgage Risk Indices — 11:00 a.m. ET

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