Gallagher Re has released its Mortgage Market Report for the fourth quarter of 2025, pointing to an economic backdrop that remains broadly supportive for housing and mortgage activity.
Gross domestic product grew by 1.0% in the quarter and 2.0% year over year. The unemployment rate edged up to 4.3%, indicating a labor market that has cooled slightly but remains relatively firm.
Household finances improved over the period. Personal income per capita climbed to a record US$76.3K per household, an increase of US$1.8k from the prior reading, which may support mortgage affordability and credit performance.
Labor force participation held at 62.3%, in line with levels seen from 2015 to 2018. A stable participation rate may help anchor wage dynamics and consumption trends that underpin housing demand.
Treasury yields and mortgage rates declined during the quarter, following two 25-basis-point cuts by the Federal Reserve. Gallagher Re noted that the Fed remains data dependent, and that uncertainty around future moves is being compounded by a government shutdown that has delayed several key economic releases.
That rate environment sits alongside a reinsurance market that, by mid-2025, was described by Aon as favoring buyers amid strong global capacity of about US$720 billion. In that setting, mortgage insurers and other cedents have had more room to negotiate risk transfer structures that align with their capital plans and tolerance for credit and housing risk.
Quarterly securitization volumes from the government-sponsored enterprises remain near 10-year lows. Freddie Mac’s market share is holding above 50%, underscoring its continued central role in mortgage funding despite reduced overall issuance.
The share of new securitizations estimated to be eligible for credit risk transfer remains near an all-time high of about 80%. That level suggests ongoing potential supply for CRT transactions, even as originations and securitizations stay muted.
Within this backdrop, mortgage insurers continue to use reinsurance to manage volatility around their books, illustrated by Radian’s recent agreement in principle on an excess-of-loss deal providing about US$373 million of protection on policies written between 2016 and 2021.
The transaction, placed with a panel of third-party reinsurers, is part of a broader move toward risk distribution strategies that blend CRT, XoL and other structures to address capital and tail risk in mortgage credit portfolios.
Analysts note that deals of this type reflect a wider recalibration of retentions and attachment points, with some carriers taking on more risk before reinsurance responds as pricing and capacity have shifted.
Recent large loss events in property lines have also prompted insurers to revisit loss modeling and protection strategy, factors that can influence how mortgage CRT programs are structured alongside the economic and housing trends.
Home prices registered a modest gain. Nationally, prices rose 0.3% in the latest quarter and were up 1.6% year over year, according to the report’s house price indices.
On an annual basis, 44 of 51 jurisdictions, including Washington, D.C., posted home price appreciation. Reported changes ranged from a decline of 3.0% in Florida to an increase of 8.4% in Connecticut, with the strongest growth concentrated in the Northeast and Midwest regions.
