The Week Ahead: Mortgage Risk Assessment

On Monday October 30th, American Enterprise Institute's (AEI) Co-director Edward Pinto and Senior Housing Analyst Tobias Peter will lead an update on the most recent National Mortgage Risk Index (NMRI). You can tune into the conference call at 11 a.m. EST.

According to AEI's most recent NMRI, which covers July data, the three main drivers towards greater risk were:

• A greater presence of first-time buyers (FTBs); FTBs MRI now almost twice as high as Repeat Buyer MRI and continues to rise rapidly, while the Repeat Buyer MRI is up only modestly since July 2013. The rising FTBs MRI is pro-cyclically helping fuel the entry level home price boom now entering its sixth year.

• Continued credit easing from nonbanks; while the purchase loan share of nonbanks has stabilized at around 60 percent, all of the year-over-year increase in risk is attributable to nonbanks as banks have maintained their more moderate levels of risk.

• A greater presence of cash out (CO) refis; as homeowners’ tappable equity has increased, the share of COs has increased in tandem. COs by nature are riskier than other loan products and they are rapidly getting riskier.

This Week’s Schedule:

• Freddie Mac Third Quarter 2017 Financial Results, Tuesday, 9 a.m. EST
• "Data Security: Vulnerabilities and Opportunities for Improvement," hearing held by the Subcommittee on Financial Institutions and Consumer Credit, Tuesday, 2 p.m. EST
• MBA Mortgage Applications, Wednesday, 7 a.m. EST
• Freddie Mac Weekly Mortgage Survey, Thursday, 10 a.m. EST
• Fannie Mae's Q3 2017 Financial Results, Thursday, 8 a.m. EST