Title insurers provide protection for lenders and homeowners against possible financial losses due to undetected legal issues surrounding a property's title. This surge in refinance activity was driven in part by historically low mortgage rates, making refinancing more attractive. In addition, the increasing acceptance of digital processes has helped streamline the process.
As a result of this surge, the Mortgage Bankers Association’s Refinance Index increased to 4,148 from 3,168 in June, an increase of 31%. Title insurers saw a corresponding increase in revenue, with revenue from refinance transactions rising 75.8% year-over-year. Furthermore, insurer expenses related to refinance transactions decreased by 4%. The volume of refinances accounted for 74% of total title insurance orders in July, an increase from 70% in June.
The increased demand for title insurance is creating ample opportunities for title insurers. Although the current surge is partially tied to the low mortgage rate environment, it is likely that the increased adoption of digital processes will result in more stable and consistent demand for title insurers in the long run. This is further reinforced by the decreasing cost of refinance transactions, resulting in more attractive services for lenders and homeowners.
Overall, the analysis of title insurance performance indicates a surge in refinance transactions, driven by the record low mortgage rates and increasing adoption of digital processes. This has led to a corresponding increase in revenue for title insurers as well as a decrease in expenses related to refinance orders. With the increasing acceptance of digital processes, it seems likely that refinance demand for title insurers will remain steady even in the future, creating stable opportunities for title insurers. The low cost of refinance deals makes them particularly attractive for lenders and homeowners alike.
This article was contributed on Jul 31, 2023