The composite National Mortgage Risk Index (NMRI) for Agency home purchase has increased by 0.8 percent on a year-over year basis.
According to the report of People Pundit Weekly, the results of the NMRI were based on home purchased loans with government guarantee. 298,000 of such purchase loans were surveyed and composited by the NMRI. The number is the second highest monthly total since the Center on Housing Risk began tracking. The total number of loans that have been risk rated in the NMRI since November 2012 has increased noticeably to over 7.3 million with the addition of home purchase loan with government guarantee.
Former executive vice president and chief credit officer for Fannie Mae, Edward Pinto said that the upward trend in the composite NMRI is caused by the continued transfer of Agency loan originations from large banks to nonbanks in September and throughout the previous 12 months. Pinto is now the co-director International Center on Housing Risk under American Enterprise Institute.
"The cut in FHA's annual insurance premium early this year has largely resulted in the purchase of higher priced homes, not increased accessibility," said Pinto. "This demonstrates once again how affordable housing policies tend not to increase affordability, and in many cases reduce it."
The September NMRI for first-time buyers hit 15.47 percent, up 1.1 percentage points from a year earlier and well above the Repeat Primary Homebuyer NMRI of 9.65 percent.
According to NMRI, the credit standards for first time buyers are not tight.70 percent of the first time buyers had down payments less than or equal to 5 percent, 27 percent of them had DTIs greater than the QM limit of 43 percent, and the median FICO score was 708, a bit below the median for all individuals in the U.S.
Stephen Oliner, a senior fellow at UCLA's Ziman Center for Real Estate and codirector of AEI's International Center on Housing Risk said that typical first-time buyer today puts little money down and chooses a mortgage that pays off very slowly but this kind of combination" means that many first-time buyers are only one recession away from being significantly underwater."
