S&P Cuts Mortgage Insurance Outlook
NU Online News Service, July 9, 4:05 p.m. EDT?Standard & Poor's Ratings Services has lowered its outlook on the U.S. domestic residential mortgage insurance industry to "Negative" from "Stable."
Charles Titterton, credit analyst at the New York-based ratings agency, listed a number of factors for S&P's outlook revision for this sector.
"The outlook was revised because of declining industry terms of trade affecting pricing adequacy, higher delinquencies and higher expenses caused by loan refinancing," Mr. Titterton said.
Currently, S&P rates eight leading residential mortgage insurers, and the ratings firm said it sees "little chance" of any outlook or rating improvements among these mortgage insurers in the next two years.
On the other hand, S&P sees a "considerable possibility" for negative changes in outlooks and ratings in the residential mortgage insurance sector.
S&P noted that the industry outlook is driven by two factors: pricing adequacy and prospective borrower defaults. And both of these factors, the ratings agency observed, have deteriorated since 2000.
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