Home / Market Trends / Affordability / Q4 2022 Delinquency Risk Held Steady at 3.5%
Print This Post Print This Post

Q4 2022 Delinquency Risk Held Steady at 3.5%

Consulting and actuarial firm Milliman has released the findings of its fourth quarter 2022 Milliman Mortgage Default Index (MMDI) finding that the latest monthly estimate of the lifetime default risk of the average U.S.-backed mortgages held steady from the third quarter of 2022 at 3.53%. 

This number means that for mortgage loans that were originated in the fourth quarter, the expectations based on current market conditions is that 5.53% will miss more than six consecutive payments and enter delinquency (180 days or more late) over the lifetime of the loan. 

According to Milliman, mortgage originations are at their lowest levels since 2019 along with refinance originations which are at their lowest levels since 2014. This is the fourth consecutive quarter that originations have decreased. 

Breaking down risk into its individual components, borrower risk decreased from 1.61% to 1.57% in the fourth quarter. Loans during that quarter had better FICO credit scores and a better loan-to-values than reported in previous quarters. Economic risk inched up from 1.90% in 2022 Q3 to 1.96% in 2022 Q4 overall, though newer originations may face a steeper increase. 

"The slight uptick in economic risk from 2022 Q3 to Q4 was offset by a decrease in borrower and underwriting risk, leading to the overall default risk remaining flat," said Jonathan Glowacki, a principal at Milliman and author of the MMDI. "We also expect to see a drop in future home price growth, which is contributing to a fairly sharp increase in economic risk for newer mortgage loans." 

About Author: Kyle G. Horst

Kyle G. Horst is a reporter for DS News and MReport. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography including best newspaper design by the Associated Press Managing Editors Group and the international iPhone photographer of the year by the iPhone Photography Awards. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at [email protected].

Check Also


What Percent of Mortgages Are Delinquent?

According to the latest Loan Performance Insights Report, 16 metro areas posted slight annual delinquency upticks. With hurricane season in full swing, some areas of the U.S. could see typical seasonal delinquencies rise later this year and into 2024.