According to the U.S. Mortgage Insurers (USMI), 2022 witnessed remarkable success in the mortgage market, with a total of almost $402 billion in mortgage originations. The majority, accounting for 97%, was dedicated to financing home purchases.
Out of the mortgages mentioned, around one million borrowers took advantage of the various low or no down payment programs provided by Fannie Mae and Freddie Mac, also known as the GSEs. Among these mortgages, approximately 97% were for new purchases, and nearly 62% of purchasers who had private mortgage insurers were first-time homebuyers.
Overall, this contributed to a total of $1.5 trillion in outstanding mortgages by the end of 2022, with private mortgage insurance providing essential safeguarding against credit risk in the GSE-backed conventional mortgage market.
The programs mentioned also proved advantageous for low- to moderate-income borrowers. Data from the GSEs reveals that almost 35% of individuals who obtained private insurance for mortgage purchases or refinancing had incomes below $75,000, with an average loan amount of $341,716. According to USMI, over its 66-year existence, the insurance industry has facilitated approximately 38 million individuals in securing affordable mortgages with low down payments.
According to USMI Chairman Adulfo Marzol, the MI industry has consistently displayed financial resilience, ensuring uninterrupted access to mortgage credit even amidst heightened stress in other areas of the financial sector. This stability was evident during the onset of COVID as well. Marzol emphasized the durability and cost-effectiveness of these transactions, which have supported the private MI industry. Additionally, the ability to secure reinsurance through MI-linked note transactions in the capital markets has been invaluable, expanding the industry’s capacity to assist borrowers seeking low down payment financing.
By the conclusion of 2022, the private MI industry possessed approximately $11 billion worth of eligible assets exceeding the GSEs’ capital requirements under the Private Mortgage Insurer Eligibility Requirements (PMIERs). This equated to a sufficiency ratio of 172%, underscoring the industry’s enhanced capacity to assist both lenders and borrowers throughout the preceding year.
