Total mortgage acquisition volume plummeted 62% in the third quarter as the industry continued to grapple with the impact of surging interest rates.
According to a new Milliman report, mortgage originations fell 62% year over year for Freddie Mac and Fannie Mae, with refinance activity driving most of the decline in volume. On a year-to-date basis, refi originations were down 87% in Q3.
“This large change in the composition of loans is having a similar impact on the default risk of originations. Generally, purchase mortgages have higher risk attributes relative to refinance loans,” the report said. “Another driver of increased default risk, for both purchase and refinance, is an expected slowdown of home price growth over the next several years.”