“We’ve been seeing default risk climb throughout the first half of 2021, driven primarily by increased economic and borrower risk for new purchase loans,” said Jonathan Glowacki, a principal at Milliman and author of the MMDI. “And while today’s housing market faintly echoes that of 2007, before the global financial crisis, we see a number of important key factors that differentiate this increase in default risk.”
Quarter over quarter, the default risk for purchase and refinance mortgages backed by Fannie Mae and Freddie Mac increased from 1.20% to 1.48%. The mortgage default rate for Ginnie Mae loans was up from 7.41% in the first quarter to 8.75% in the second quarter.