Fitch: Increased Originations Will Benefit Title Insurers in 2025

(Illustration courtesy of Fitch Ratings)

Continued housing market resiliency will benefit U.S. title insurers in 2025 as broader macro headwinds continue to subside, according to Fitch Ratings, New York.

In its outlook report for the sector, U.S. Title Insurance Outlook 2025 (subscription), Fitch said a projected slowdown in U.S. GDP growth next year along with a mild Fed interest rate easing will not likely stunt a projected increase in mortgage originations in 2025. “This will translate into a slight improvement in operating performance for title insurers as total revenues and margins continue to recover from 2023 lows,” the report said.

Fitch Senior Director Chris Grimes said mortgage rates will be more favorable for borrowers in 2025, “which will cause mortgage originations to gradually increase following recent periods of depressed activity,” he said, noting Fitch is maintaining a neutral sector outlook “as a result of a benign claims environment and strong capital levels, combined with a leaner expense structure.”

Conversely, “a prolonged or particularly severe recession that significantly reduces U.S. housing demand could cause title margins to fall below our expectations,” Grimes added.

Heading into 2025, the housing market will benefit if the Fed continues its rate decreases. “Continued volatility in 30-year mortgage rates could lead to short periods of increased refinance activity,” the report said. “However, a meaningful recovery in refinance transactions is unlikely unless mortgage rates drop significantly in the next several years.”

Also worth noting: “with a large volume of loan maturities in the upcoming year, growth in commercial property market activity is expected to provide an additional boost to overall margins for title insurers,” Grimes said.