The title insurance industry saw a surge in premium volume in the second quarter of 2020, according to the American Land Title Association’s latest Market Share Analysis.
It’s no secret that lending volume is up in 2020. In fact, the latest Fannie Mae forecast says mortgage lending will hit an all-time high of $3.9 trillion this year, largely due to record volumes of refinancings.
“We continue to believe that a low-rate environment will support refinance demand over the forecast horizon,” Fannie Mae said in the forecast. “At the current interest rate of 2.86%, we estimate that nearly 69% of outstanding first-lien loan balances have at least a half-percentage point incentive to refinance.”
But title insurance premiums are also surging as a result. The title insurance industry generated $4.18 billion in title insurance premiums during the second quarter of 2020, ALTA’s report showed. This is up 8% from the same period last year.
“Despite the pandemic, low interest rates in the second quarter of 2020 has been positive and productive for the land title insurance industry,” ALTA CEO Diane Tomb said. “Title insurance premium volume is dependent on mortgage origination volume, and 45 states showed that second-quarter premiums written increased 8% compared with the second quarter of 2019.”
“Although we are not experiencing the near-historic origination volume we saw in the first quarter, the majority of the country is still trending upward,” Tomb said.
Overall, total operating income for the industry was up 8.2% and operating expenses were up 8.4%, but loss and loss adjustment expenses were down 27%, the ALTA report shows.
“We expect residential housing market and refinances—buoyed by low mortgage rates—to remain strong throughout the year,” Tomb said. “The question left outstanding is how the commercial market will rebound. Depending on how the commercial market performs during the rest of the year, 2020 could prove to be one of the strongest years on record.”
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