The MReport Webcast: Tuesday 11/25/2014

Loan risk in the mortgage market stayed more or less flat from September to October, remaining at nearly double the historical stable level, according to a report. The American Enterprise Institute's National Mortgage Risk Index for home purchase loans stood at 11.4 percent in October, little changed from the previous three-month average but nearly 1 percentage point above its year-ago level, the group said Monday. The index measures the percentage of purchase loans that would be at risk of default in the event of another economic downturn.

Among the nearly 5 million mortgages measured in October's index, 44.7 percent were made to first-time homebuyers. The risk reading for these loans came in slightly higher than the composite index at 14.5 percent. The AEI said the elevated level of risk for that group stemmed largely from the concentration of mortgages insured by the Federal Housing Administration, as few first-time buyers have the money needed to make a standard down payment. Nearly a quarter of those loans also had excessive debt-to-income ratios, one of the major contributors to today’s risk environment.

A new forecast of existing-home sales calls for a mostly flat sales rate in November following a better than expected boost in October. The latest Nowcast report, powered by Google data and released Monday by Auction-dot-com, projects existing-home sales for November will fall between seasonally adjusted annual rates of 5.05 million and 5.46 million units, with a targeted number of 5 and a quarter million sales. If the company's estimate is correct, November would mark the second month this year in which existing-home sales beat out last year's figures.