Private mortgage insurers experienced a weaker first quarter compared to the same period last year, with new insurance written falling by 9%. However, this was relatively flat compared to the volumes seen in the last three months of 2023. Despite this, total mortgage production also saw a decrease quarter-to-quarter, with estimates from the Mortgage Bankers Association showing $377 billion for the period ended March 31 compared to $399 billion three months earlier. Despite this decrease, it was still higher than the first quarter of 2023, which saw a volume of $333 billion.
During this period, MGIC saw a decrease in market share, benefiting Radian and National MI instead. Radian saw a 1.5 percentage point increase to 19.5% market share, while National MI saw an 0.8 percentage point increase. Industry-wide, new insurance written for the first quarter totaled $59.1 billion, slightly higher than the previous quarter’s volume of $59 billion but lower than the $64.6 billion seen in the first quarter of the previous year.
Private mortgage insurance is often used as credit enhancement for loans with loan-to-value ratios over 80% sold to Fannie Mae and Freddie Mac. It competes with government programs like the Federal Housing Administration (FHA). As such, private mortgage insurers are facing challenges in a market environment where interest rates are high and consumer confidence is low. This is particularly evident when looking at Radian’s and National MI’s increased market share during this period as they benefit from their competitive advantage over MGIC and other private mortgage insurers.
The decline in new insurance written activity was even more pronounced when compared to the fourth quarter of 2023, with a 15% decrease. Looking at the six active mortgage insurance underwriters’ results during this time period it is clear that industry faces challenges in current market conditions.
Overall, these results highlight that private mortgage insurers face stiff competition from both traditional lenders and government programs like FHA in today’s market environment. Additionally, high interest rates and low consumer confidence can make it difficult for borrowers to qualify for loans or afford them if they do qualify.
In conclusion, while private mortgage insurers may have experienced some growth compared to previous years’ first quarters due to increased demand from Fannie Mae and Freddie Mac during periods of economic uncertainty or recession