We’re not at the back end of whatever we’re in right now. And candidly, over the last several months, we’ve seen, let’s say, the volume in terms of external risk factors perhaps turn up a bit, right? We have significant incremental geopolitical instability. We have this sector, the U.S. government shut down a few weeks forward. We still have long rates that are increasing with uncertainty as to what that will ultimately mean for the economy. And so when we’re focused on risk right now, the items that we’re most focused on that we’re most concerned about, naturally are those that will touch borrower performance and consumer performance. It’s the macro, it’s house price paths. It’s where unemployment might go in response to all of these environmental factors that surround us.
Max Mosbacher: That’s helpful. Thank you.
Operator: Your next question comes from Eric Hagen with BTIG. Please go ahead.
Eric Hagen: Hi, thanks. Hope you’re doing well. Hi, can you maybe elaborate on what you’re seeing with respect to, you know, what I think I heard you say is a balanced and constructive pricing market? And are you may be surprised that it’s not more competitive or being characterized that way, just given how slow, you know, new origination activity is in the market?
Adam Pollitzer: No. It’s – again, it’s a very good question. And let me touch then both on the origination environment itself as well as on the pricing environment. I’ll start with pricing. But broadly speaking, we continue to be really encouraged by the discipline that we see across the market. And what I say is a really deliberate approach that the industry is taking. We’ve noted for a while now that rates have hardened and what we call laddered hire in view of emerging macro risks over the last year or so and we were able to achieve incremental pricing where we believed it was both necessary and appropriate. Today, where we should be, right? We’re at a point where pricing is meaningfully higher than it was in mid-2022. And it’s holding in a constructive way.
And from our vantage point, we’re still focused every day on ensuring that we strike the right balance to fully and fairly support our customers and their borrowers, but also recognize that macro risk from a forward-look standpoint is still elevated, and we need to account for that through price and also for us, importantly through risk selection. And so we’re not surprised at all. We think that the heavy investment in the sector and the deployment of risk-based pricing tools lends itself to great value in an environment where the potential for risk is still more elevated. You touched on, you know, a question around origination volume. And obviously, look, we’re not where we were at peak points during the pandemic with record years in 2020, 2021, and even a bit more in 2022.
But it is still a very constructive environment, new business environment from an MI standpoint. Right? Ours is primarily a purchase-driven product. And to give you a sense, you know, the purchase origination market this year is expected to come in at about $1.3 trillion, which is exactly the same size as in 2019. 2019 was a very constructive MIU business environment. And as we look forward to next year, general forecast contemplate around $1.4 trillion to $1.5 trillion purchase market, up from 2023, up from a pre-pandemic normalized level in 2019. And so yes, the headlines are obviously about a slowing level of activity on the origination side. We’re seeing that stress emerge through the originators themselves, but ours as a primarily purchase-focused market, the new business opportunity is sustained at an attractive point.
Eric Hagen: Yes. That’s really helpful. Hi, so is there a scenario where delinquencies could pick up? You know, at some point, I recognize that they’re, you know, very low and stable to begin with. But, you know, is there a scenario where delinquencies could pick up with the severity rate that’s applied to those delinquencies, you know, stays stable or even comes down? Or is it rational to assume that they kind of move together, if you will?
