S&P Global Ratings just published its 2017 outlook for U.S. private mortgage insurers.
It’s pretty good news, too.
In the report, titled "U.S. Private Mortgage Insurance Outlook: With The Credit Cycle Holding Strong And Financial Strength Stabilizing, Insurers Look To The Future," S&P Global Ratings says it expects 2017 will be another year of robust earnings, continuing the trend of the past few years.
"Having suffered during the crisis, PMIs are benefitting greatly from improving economic and housing fundamentals, and from the tightened underwriting of the loans originated post-crisis," said S&P Global Ratings credit analyst Hardeep Manku.
Why such an upbeat outlook?
Well, troubled vintages are winding down in an orderly fashion.
Also, recent mortgages are comparatively high credit in terms of underlying quality.
And it’s not just for 2017, as S&P predicts private mortgage insurers are set to enjoy robust earnings over the next few years.
But there’s a catch, according to a release on the report:
However, competitive pressures remain high and are likely to increasingly come to bear this year. In view of that and as the balance sheets are stabilizing, PMIs are looking to engage further within the government-sponsored enterprise ecosystem and actively preparing for the non-GSE business to come back in an effort to open up additional revenue streams.
Indeed, PMIs are actively engaged in Fannie Mae and Freddie Mac reform proposals.
For more on the latest GSE plan, click here.
"Overall, in view of strong underlying credit fundamentals, we see limited downside for the ratings, though circumstances vary and considerations at the overall group level could come to bear in the case of a few insurers that are part of diversified groups," added Manku.