While
Nearly 800,000 Americans private MI to purchase a home in 2023, with 64% being first-time buyers. In 2022, over 1 million buyers used PMI, with 62% being first-timers.
For the full year, 57.2% of all new mortgage insurance written was from the private underwriters, and 42.8% came from the Federal Housing Administration, according to a March report from Keefe, Bruyette & Woods. That is the closest split between the two forms of mortgage insurance since 2017.
Among the catalysts for the market share change was the Biden Administration's
In 2023, nearly all of the private MI written was for purchases, Seth Appleton, the president of USMI noted, which is a more normal environment for the product. During the
Including all of the other options for low down payment consumers, private MI made up almost half of that market last year, Appleton noted.
"There's still a lot that's attractive for a first time buyer about getting into the housing market," Appleton said. "This underscores that there's still opportunity, frankly, for buyers to participate, if they can find the right house and with MI, they don't have to
Nearly 35% of the 2023 purchasers that needed PMI had annual incomes below $75,000, similar to the percentage for 2022.
The average loan amount for buyer that used PMI as a credit enhancement was $346,817 in 2023. In 2022, that average for homes purchased or refinanced was $341,716.
That was a 1.5% gain. In comparison, median sales prices in December
Private MI supported approximately $283 billion of mortgage originations in 2023, down from $402 billion one year prior. However, purchase mortgage volume was down to $1.33 trillion for 2023 from $1.62 trillion in 2022, according to the Mortgage Bankers Association.
Still, these data points all reflect that the private mortgage insurers are providing a product that allows the first-time buyer, as well as the low-to-moderate income consumer along with the minority communities to take that journey to access owning a home, Appleton said.
As for the Biden Administration's push to reduce the costs associated with buying a home, Appleton noted that "MI can't solve for interest rates or housing supply, but it certainly can solve for what's traditionally been the biggest impediment, at least that's been cited in a lot of research by prospective home buyers, which is the need for this large cash down payment."
Among the more interesting findings of the USMI study, the organization said, is that the five states with the largest usage of MI to purchase a home — Texas, Florida, California, Illinois and Ohio, were different from the states that had the most growth. Those were Vermont, Montana, Maine, North Dakota and Wisconsin, with Ohio coming in sixth.
But slight overlap exists with the largest growth in states where borrowers only put 3% down: Michigan, Indiana, North Dakota, Missouri and Ohio.
Among the five states where the product was used the most, the first-time buyer share ranged from 72% in California and 71% in Illinois to just 58% in Florida.
The report also looked at
Internal Revenue Service data from that tax year recently became available, Appleton said, which showed 1.28 million Americans claimed the deduction for $2.9 billion.
Many of those borrowers decided to itemize even with the enhanced standard deductions that the Tax Cuts and Jobs Act offered during that period.
"I think it's pretty noteworthy, and it is our hope that as Congress continues to think about tax legislation, this is on the table," Appleton said.
