Author: Anders Klintoe
Gallagher Re is pleased to provide the quarterly Mortgage Market Report for Q3 2024.
The report seeks to highlight the major economic mortgage drivers along with Credit Risk Transfers (CRT) Performance and an origination quality index both derived from Freddie Mac's Agency Credit Insurance Structure (ACIS®) and Structured Agency Credit Risk (STACR®) Programs.
The latest quarterly economic indicators show resiliency in key areas. Gross Domestic Product (GDP) has demonstrated continued strength, expanding by 0.35% in the quarter and 1.4% on an annual basis (see: Section 3.3 "Gross Domestic Product" in the report). The unemployment rate ticked slightly higher to 4.1% (see: Section 4.1.1 "Unemployment Rate" in the report). Personal income per capita continued to grow, reaching an all-time high of $70.3K per household (see: Section 3.4 "Personal Income per Capita" in the report). The labor force participation rate remained flat in the quarter, aligning with the participation rate observed during 2015-2018 (see: Section 3.2 "Labor Force Participation Rate" in the report). The Consumer Price Index (CPI) surprised on the downside in June, leading to expectations of a September rate cut nearing almost 100%. However, the change in rate expectations has not yet been fully reflected in mortgage rates, which remain at an average of 7.0% (see: Section 2.7.1 "Mortgage Rate Developments" in the report).
Quarterly Government-Sponsored Enterprise (GSE) securitization volumes are at a near 10-year low, driven by high mortgage rates and low inventory. Freddie Mac's market share has grown significantly, rising from approximately 35% to around 50% in recent quarters. Additionally, the estimated CRT-eligible share of new securitizations remains close to its all-time high of 84% (see: Section 2.4 "Origination Volume" in the report).
Despite low levels of originations and high mortgage rates, home prices continued to increase throughout 2023 and into 2024. The index rose by 5.9% year-over-year and 0.5% quarter-over-quarter, currently reaching an all-time high (see: Section 2.1.1 "National House Price Change" in the report). On a year-over-year basis, all states are showing increasing prices, with growth ranging from 0.5% in Montana to 10.3% in New Jersey. The East Coast, particularly the Northeast, has experienced the strongest growth (see: Section 2.1.3 "Annual State Level House Price Change" in the report).
Reach out to Anders Klintoe for the full in-depth report.
