Tag Archives: Agency Purchase Loans

The news for the housing industry has not been positive in the last few days from the reports of low inventory, rising prices, stagnant wage growth, and disappointing new home sales. Default risk on Agency mortgage loans is increasing as well.

The riskiness of agency purchase loans has increased year-over-year every month since January 2014. What is driving the constant rise in risk?

Also according to AEI's July report, 71 percent of Agency purchase loans had down payments of 5 percent or less, and 25 percent of them had DTI ratios greater than the QM limit of 43 percent. The median FICO score for first-time buyers was 709, a bit below the median for all individuals in the United States.

May's NMRI stood at 12.33 percent, which was an increase of 0.4 percentage points from the prior three-month average and a jump of 0.7 percentage points from May 2014, according to AEI. The composite risk index reached a series high, as did the index for Veterans Affairs-backed loans, while the share of high-risk loans backed by the Federal Housing Administration (FHA) increased.