MGIC Advances as Home Prices Show Housing Rebound: Chicago Mover
MGIC Investment Corp. (MTG), the mortgage insurer that breached regulators’ capital limits, jumped in New York trading after a report on October home prices showed values beat forecasts, signaling a sustained recovery.
The S&P/Case-Shiller index of property values in 20 cities increased 4.3 percent from October 2011, the biggest 12-month advance since May 2010. Rising home prices can reduce the gap between the value of a home and how much a borrower owes. They can also lower costs for mortgage insurers, which cover losses when homeowners default and foreclosures fail to recoup costs.
“You have higher recovery values,” said Jason Stewart, an analyst at Compass Point Research & Trading LLC in Washington. “Higher values of homes improve the ratio of borrowers that go into default because there’s less people with negative equity.”
The home-price increase accelerated from a 3 percent advance in the 12 months ended in September. Adjusted for seasonal variations, prices rose 0.7 percent in October from the prior month, with 17 of 20 cities showing gains, according to today’s report.
To contact the editor responsible for this story: David Scheer at email@example.com