Mortgage rates were slightly lower from last week and loan defect levels remained unchanged from the previous reports, according to two new data reports.
Separately, the frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage applications during February remained the same compared with the previous month, according to the latest First American Loan Application Defect Index
. On a year-over-year basis, the Defect Index increased by 9.2 percent.
February’s Defect Index for refinance transactions remained unchanged compared to January and was 13.1 percent higher than a year ago. The Defect Index for purchase transactions decreased by 1.1 percent compared with the previous month and is up 7.1 percent compared with a year ago.
Mark Fleming, Chief Economist at First American, expressed concern that the rise in the 30-year fixed-rate mortgage would spur new problems.
“This matters for defect, fraud and misrepresentation risk as rising mortgage rates reduce the benefit of refinancing and increase the share of purchase loan transactions in the market,” Fleming said. “As we have noted before, purchase loan transactions are riskier than refinance transactions.”