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Operator
Hello and welcome to Enact's first quarter earnings call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Daniel Cole, Vice President of Investor Relations. You may begin.
Enact
Welcome to our first quarter earnings call.
spk06
Joining me today are Rohit Gupta, President and Chief Executive Officer, and Dean Mitchell, Chief Financial Officer and Treasurer. Rohit will provide an overview of our business, our performance, and progress against our strategy. Dean will then discuss the details of our first quarter results before turning the call back to Rohit for some closing remarks. After prepared remarks, we will take your questions. The earnings materials we issued after market closed yesterday contains and acts financial results for the first quarter of 2022 and a comprehensive set of financial and operational metrics are available on the Vestor Relations section of the company's website at www.ir.enactmi.com under the section marked Quarterly Results. Today's call is being recorded and will include the use of forward-looking statements. These statements are based on current assumptions, expectations, and projections as of today's date that are subject to risks and uncertainties, which may cause actual results to materially differ. We undertake no obligation to update or revise any such statements as a result of new information. For a discussion of these risks and uncertainties, please review the cautionary language regarding forward-looking statement in today's press release, as well as in our filings with the SEC which are available on our website. Also, please keep in mind the earnings materials and management's prepared remarks today will include certain non-GAAP measures. Reconciliations of these measures to the most relevant GAAP metrics can be found in the press release, our earnings presentation, and our upcoming SEC filing on our website. With that, I'll turn the call over to Rohit.
Rohit Gupta
Thank you, Daniel. Good morning, everyone, and welcome to our first quarter earnings call. The first quarter marked an excellent start to 2022 for Enact. We grew our portfolio 10% year over year, initiated a quarterly dividend program, and generated strong operating and financial results, including adjusted operating income of $165 million, or $1.01 per share, and return on equity of 16.2%. Importantly, we achieved these results while also maintaining our commitments to balance sheet strength and strong risk management. We continued to execute on our strategy in a dynamic market environment. We strengthened and deepened relationships with customers, providing them with innovative solutions and prudently pursued opportunities to win new business. We also continued to prioritize a strong balance sheet that provides a financial flexibility to support our existing policyholders, invest for growth, and return capital to shareholders. We have said that one of the key benefits of our IPO would be the ability to strengthen and expand our client relationships as a result of our enhanced financial strength and independence. And last quarter, we noted that we had reactivated our relationship with a key customer. We have seen this momentum continue in the first quarter, as we have either deepened or activated relationships with a substantial number of targeted customers. This progress contributed to our strong insurance and force performance in the first quarter of 2022, up 10% from a year ago to record levels as we continue to write profitable new business. We have told you that we are committed to pursuing high-quality business as we target the right price for the right risks. with new business pricing yielding low to mid-teen returns in 2022. During the quarter, we saw pricing on new insurance written continue to stabilize with fewer and lower magnitude of pricing moves in the market. The high credit quality of our portfolio was again evident in the quarter. The weighted average FICO score of our portfolio at quarter end was 742. Our average loan-to-value ratio was 93%, and our layered risk concentration remained low at about 1.6%, a level that we believe is sustainable. The combination of effective risk management, our focused loss mitigation efforts, and the continued economic recovery resulted in a $50 million reserve release, which contributed to our loss ratio of negative 4%. Cure activity was again robust and outpaced new delinquencies, resulting in a continued decline in total delinquencies. We did see a modest uptake in new delinquencies sequentially during the quarter, something that is to be expected as our newer large books age and track to normal loss patterns. These newer books continue to perform in line with our expectations at origination. During the quarter, we successfully executed two additional excess of loss reinsurance transactions to strengthen our capital position and acquire loss protection on our newer books. The execution of these transactions demonstrates our ability to source cost-effective PMIRES capital and loss protection in a period of capital markets volatility and widening spreads. As of the end of the quarter, 93% of our risk in force was covered by credit risk transfers. Notably, we ended the quarter with the second highest PMIRES buffer to publish standards in our history at 176% or $2.3 billion of sufficiency. The strength of our business and balance sheet positioned us to achieve a significant milestone in our capital allocation strategy. With the announcement that our board of directors approved the initiation of a dividend program reflecting our intent to pay a quarterly cash dividend. The first of these would be paid in the second quarter of 2022 at 14 cents per share. This is a significant step that reflects our confidence and focus on meeting our commitment to create value for shareholders, and we plan on returning additional capital by year end. Dean will provide more details about the quarterly dividend and speak to our capital allocation framework in a moment. Before I turn it over to Dean, I would like to discuss the current environment and how we are thinking about the business in 2022. We've all seen the headlines. Market dynamics are undoubtedly complex, but remain supportive overall for our business. Factors such as changes in interest rate policy, which is leading to higher mortgage rates, and home price appreciation present challenges to affordability. However, the consumer remains resilient, with higher savings than pre-pandemic levels, the labor market is very strong, housing supply remains at historical lows, and the ongoing post-pandemic shift towards home ownership all underpin strong home buying demand. We believe this demand will continue to drive a robust purchase originations market in the near term, which drives a healthy private mortgage insurance market. Further, as a consequence of higher interest rates, we expect the persistency of our insurance and force portfolio to improve as refinancing activity declines. Importantly, both ENACT and the industry have evolved substantially in the last decade. The implementation of the qualified mortgage definition, which drives higher credit and manufacturing quality, the move to granular risk-based pricing, which produces greater uniformity in risk-adjusted returns executed at a faster pace, and a resilient credit risk transfer program at cost-effective levels all drive an improved and stable framework for our business. These enhancements, combined with our strong balance sheet, and 93% of our book being covered by credit risk transfer programs provide us with significant financial strength and flexibility. In addition, the investments we have made in innovation and digitization to enable auto-decisioning in underwriting and pricing granularity drives superior risk management and loss mitigation. And we have significantly strengthened the quality of our loan portfolio. Today, We are better positioned than ever to leverage our deep experience to adapt, manage, and grow in a market that we believe continues to provide significant opportunities for prudent growth within our risk-adjusted return appetite. We will monitor and navigate these dynamics every day, as we have been, as we continue to execute on our strategy. We are encouraged by our performance to date and confident in our ability to execute going forward. I will now turn the call over to Dean to discuss our first quarter performance in more detail.
Daniel
Thanks, Rohit. Good morning, everyone. We delivered very strong financial results in the first quarter of 2022. Gap net income was $165 million, or $1.01 per diluted share, as compared to $0.77 per diluted share the same period last year and $0.94 per diluted share in the fourth quarter of 2021. Adjusted operating income was also $165 million, or $1.01 per diluted share in the quarter, as compared to $0.77 per diluted share in the same period last year and $0.94 per diluted share in the fourth quarter of 2021. Turning to key revenue drivers, new insurance written was $19 billion for the quarter, in line with our expectations, and down sequentially from $21 billion, primarily driven by seasonally lower purchase originations. New insurance written for purchase transactions made up 92% of our total NIW for the quarter, up from 90% last quarter. In addition, monthly payment policies remained at 91% of our quarterly new insurance written, consistent with last quarter. Insurance in force reached a new record of $232 billion, up 10% from the first quarter a year ago, and up 2% sequentially. The year-over-year increase was primarily driven by strong new insurance-ridden and increased persistency. Risk and force at quarter end was $58.3 billion, up from $56.9 billion at year end and $52.9 billion in the first quarter of 2021, primarily driven by our growing insurance portfolio. With increasing interest rates, we saw an increase in persistency during the first quarter. Persistency for the period improved to 76%, up from 69% last quarter and 56% in the first quarter of 2021. In addition to rising mortgage rates, the increase in persistency was driven by a continued decline in the percentage of our enforced policies with mortgage rates above current market rates. Revenues for the quarter were $270 million compared to $273 million last quarter and $289 million in the same period last year. Net premiums earned were $234 million, down 7% year-over-year and down 1% sequentially, driven by the lapse of older, higher-priced policies as compared to our new insurance written and lower single premium cancellations as persistency increased. In addition, the decrease in net premiums earned year-over-year was also driven by higher seeded premiums in the current quarter from the expanded use of our credit risk transfer program. These factors were partially offset by growth of our insurance and force. Our base premium rate of 42.3 basis points was down 1.1 basis points sequentially and four basis points year over year, driven primarily by the lapse of older higher price policies as compared to our new insurance written. As we've discussed in the past, there are a number of macroeconomic and consumer-driven factors that drive movements in premium rates, which can be volatile on a quarterly basis. Given our view of the current market and related assumptions, including our assumption on persistency, our 2022 full year estimate is an approximately four basis point decline in premium rate or three basis points over the remainder of 2022. Transitioning to net earn premium rate, in addition to the lapse of older, higher price policies as compared to our new insurance written, our net earn premium rate is also impacted by lower single premium cancellations and higher seeded premiums from our credit risk transfer program. Investment income in the first quarter was $35 million, flat both sequentially and versus a year ago, primarily as our larger portfolio was offset by lower bond calls during the quarter given the rising interest rate environment. Turning to credit, losses in the quarter were negative $10 million as compared to $6 million last quarter and $55 million in the first quarter of 2021. Our loss ratio for the quarter was negative 4% as compared to 3% last quarter and 22% in the first quarter of 2021. The benefit and losses and loss ratio in the quarter was primarily driven by 50 million of reserve release, primarily on 2020 COVID-related delinquencies, which have cured at levels above our prior expectations. New delinquencies in the quarter were approximately 8,700, an increase of approximately 400 sequentially, and a decrease of approximately 1,300 from year-ago levels. The sequential increase in new delinquencies was primarily driven by our large new books that are aging and going through their normal loss development pattern and performing in line with our expectations. Our new delinquency rate for the quarter was 0.9% consistent with pre-pandemic levels of development and indicative of ongoing recovery. Our claim rate estimate on new delinquencies for the quarter was approximately 8%, consistent with the claim rate for new delinquencies throughout 2021. Our first quarter total delinquencies of approximately 22,600 and the associated delinquency rate of 2.4% represent ongoing improvement in both measures, driven by the continuation of CURES outpacing new delinquencies. CURES in the quarter of approximately 10,800 decreased modestly as compared to the prior quarter and represented a cure ratio of 124%. I'll now turn to our ever-to-date cure performance on COVID-19 new delinquencies or those new delinquencies since April of 2020. As depicted on page 12 of our earnings presentation, to date, approximately 93% of the 2020 COVID delinquencies have now cured. Cures on COVID-related delinquencies have been aided by favorable resolutions of forbearance programs, home price appreciation, and our loss mitigation efforts. As a result, cumulative cure rates have continued to increase through time and are the primary driver of the reserve release actions taken in the current quarter. The embedded equity position of our delinquent policies remains substantial, with approximately 97% of our delinquencies as of the end of the quarter having an estimated 10% or more mark-to-market equity using an index-based house price assessment. As I've noted in the past, this can serve as a potential mitigate, both to the frequency of claim, as well as the potential future loss for delinquencies that ultimately progress the claim. And we saw evidence of this trend during the quarter. Turning to expenses, operating expenses for the quarter were $57 million and the expense ratio was 24% as compared to $59 million and 25% respectively in the fourth quarter of 2021. As a reminder, operating expenses in the fourth quarter of 2021 included $1 million of strategic transaction preparation costs and restructuring costs. Moving to capital and liquidity, our PMIR sufficiency increased sequentially in the first quarter to 176%, or approximately $2.3 billion above the published PMIRES requirements, compared to 165% or $2 billion in the fourth quarter of 2021. At quarter end, we had approximately $1.6 billion of PMIRES capital credit and approximately $1.8 billion of loss coverage provided by our credit risk transfer program. As Rohit referenced, this quarter we executed two reinsurance transactions as part of our credit risk transfer program. The first reinsurance transaction secured excessive loss coverage from a panel of highly rated reinsurers covering our new insurance written throughout 2022. In addition, we executed another $325 million excessive loss reinsurance transaction on the second half of 2021 risk and force, leveraging the traditional reinsurance market. We believe this transaction serves as another proof point to the value of diversified capital sources. which allowed us to secure incremental coverage on attractive terms despite volatility in other parts of the market. Since its inception in 2015, we have executed a total of $4.4 billion of loss protection through our credit risk transfer program through both the traditional reinsurance market and capital markets. As previously announced, our board of directors approved the initiation of a quarterly dividend program. The initial quarterly dividend for the second quarter of 2022 will be 14 cents per share, payable in May. Future dividend payments will be subject to Board of Director approval and targeted to be paid in the third month of each subsequent quarter. During April, our primary mortgage insurance operating company, Enact Mortgage Insurance Corporation, or Emico, distributed $242 million from its paid-in capital to our holding company, Enact Holding Think. We intend to use these proceeds and additional distributions in part to fund the quarterly dividends, as well as to bolster our financial flexibility at our holding company and return additional capital to shareholders. We believe the initiation of a quarterly dividend program reflects meaningful progress towards our 2022 capital management plans. In addition to the quarterly dividend, we plan to return additional capital to shareholders later in the year. We'll continue to evaluate the most appropriate amount of total capital to return to shareholders over the course of 2022. Our ultimate view will be shaped by our capital prioritization framework, which prioritizes supporting our existing policyholders, growing our mortgage insurance business, funding attractive new business opportunities, and returning capital to shareholders. Our total return of capital will also be based on our view of the prevailing and prospective macroeconomic conditions the regulatory landscape, and business performance. So to recap, we generated very strong performance in a dynamic macroeconomic environment. As we continue to execute through the remainder of the year, we will maintain a disciplined approach to capital and liquidity while investing in our growth and returning capital to shareholders. With that, I'll turn it back to Rohit.
Rohit Gupta
Thanks, Dean. All in all, a very strong start to the year. I'd like to thank each and every member of the Enact team for their contributions to our performance. Our company is well positioned for 2022 and beyond as we continue to build on the momentum we have generated. With record insurance in force and a strong balance sheet, we are confident in our business and in our ability to successfully navigate this dynamic market. Our role in helping families achieve their dreams of homeownership has become even more important in today's market environment. In the first quarter, we made it possible for 55,000 home buyers to qualify for a mortgage who otherwise might not have, while also working hard to keep others in their homes through loan modifications. We are very excited by and proud of the role we play in this market and remain committed to working with Capitol Hill, the administration, great groups, and consumer advocates to drive solutions that increase the accessibility, affordability, and sustainability of homeownership. We are now ready to take your questions. Operator?
Operator
As a reminder, to ask a question, you will need to press star 1 on your telephone. And to withdraw your question, just press the pound key. Please stand by while we compile the Q&A roster. Our first question will come from the line of Rick Shane from JPMorgan. Your line is open.
Rick Shane
Good morning, guys. Thanks for taking my questions. Look, you know, as we see the market evolving in terms of greater competition for originators as volumes fall, curious if you're seeing any distortions either in terms of pushback on pricing or, more importantly, in terms of more aggressive loan structures.
Rohit Gupta
Good morning, Rick. Thanks for the question. So I would say, having seen some competition in the market and the origination market space in the last four months, as interest rates have gone up by almost 200 basis points, we have not seen an impact of that coming over to the MI industry, either in terms of asking for more pricing competition on the MI price or in terms of credit policy or loan structuring. So at this point of time, we believe that those dynamics continue to remain similar to what we have seen in the past.
Rick Shane
Got it. And when you think of sort of analogs historically, where do you think we are? What is the most comparable timeframe to think about in terms of the competitive landscape and the evolving environment?
Rohit Gupta
And Rick, when you say competitive landscape, you are referring to MI industry or origination at broad, similar to your first question?
Rick Shane
Actually, probably both. I hadn't bifurcated in the way that you're describing, but I think it's important to consider both.
Rohit Gupta
Yeah, so on the origination market, it's probably not our place to comment on what the competition dynamics are and what can it be comparable to. I would say in the MI marketplace, as I said in my prepared remarks, We continue to see stabilization in pricing. We saw fewer and lower magnitude of pricing moves in the market in the first quarter. So that gives us confidence that we are approaching that point of stabilization. And in terms of finding a comparable point historically, I would just say the macro conditions are so different than many of the times we have gone through in the last two decades in the industry that it's difficult to compare the current dynamics to any of the prior economic or kind of industry dynamics time.
Rick Shane
Robert, I appreciate the last comment. I agree with you. I think we're grasping at straws in terms of understanding this environment as well. It's part of what drives the question, so thank you very much.
Robert
Yeah.
Operator
Thank you, Nick. Our next question comes from Doug Harder from Credit Suisse. Your line is open.
Robert
Thanks. Understanding that, as you just said, the environment is different, but how do you think about persistency and, in particular, you know, the potential for policyholders to cancel their policy given the strong home price appreciation that we've seen.
Daniel
Yeah, Rick. Excuse me, Doug. Thanks for the question. Appreciate that. I'll start off talking about persistency in general. I'll turn it over to Rohit to talk about borrower behavior as it relates to borrower-initiated cancels. So just to recap, persistency was up to 76%, up seven points sequentially, and 20 points year over year, driven primarily by higher interest rates. I think, you know, given the loan origination process and time from borrower qualification to loan closing, there's still about a month or two lag between persistency results and really current market conditions. So our Q1 persistency of 76% really doesn't include the recent run-up of mortgage rates that took place throughout February and March. And as a result of that, I think we'd expect future persistency to continue to increase above Q1 levels as we make our way out of the quarter and into the remainder of the year. Rohit, I'll turn it over to you for borrower behavior.
Rohit Gupta
Sure. Thanks, Dean. So, Doug, I would just add to Dean's question one extra point on persistency and then borrowers. I think on persistency, bigger picture, we expect persistency to be a tailwind in our ability to grow our portfolio as our $232 billion of insurance in four stays longer. And it gives us an ability to also hedge against any pressure on market originations just from higher interest rates and higher home prices. Now, on borrower-initiated cancels, we believe that it's at least driven by two factors, and there might be more. First one, for borrower-initiated cancels, which is essentially borrower goes out, gets an appraisal, submits that appraisal to their servicer to request a cancellation under HOPA. GSEs have a seasoning requirement, which is a combination of number of years and current loan-to-value requirements. That applies to borrowers to cancel MI based on updated appraisal and updated home price. Second thing is it requires an action on borrower's behalf to spend money, get an appraisal, and submit it to their servicer to see if they qualify. So they have to spend anywhere from $200 to $400 on an appraisal, take that initiative, and then not have the certainty of that cancellation So that's how we think about the considerations in terms of actual trends of water cancellation. We have seen some volatility in that number recently and in the past, even going back two and a half years ago. It's a very small portion of overlaps, and we are keeping an eye on it. So nothing meaningful to report at this point of time outside of that comment.
Robert
Great. I guess, what is the seasoning requirement? Just so I'm aware of that.
Rohit Gupta
Yes. So, Doug, first seasoning requirement is minimum of two years. And between, if the loan is seasoned, and I'm talking about GFC loans, so that would apply to a significant portion of our portfolio. So two years minimum, after two years, but before five years, the updated current loan-to-value needs to be 75% for cancellation, and then beyond five years, that drops to 80% current loan-to-value based on appraised value. And given that, just to kind of connect the dots here, if you think about our insurance-enforced concentration, the last two vintages, 20 and 21, make up 66% of our book. You add 20, 22 to it, that's another eight points. So that portion of our book kind of doesn't meet that seasoning requirement or barely meets that seasoning requirement. So that tells you how you think about in-the-money risk on borrower-initiated cancels.
Robert
Great. Thank you.
Operator
Yep. Thank you. Our next question comes from the line of Boze George from KBW. Your line is open.
Boze George
Hey, guys. Good morning. Actually, first, just one on the dividend. When we look out into kind of 2023, are we likely to see the dividend more in the form of just a regular dividend or, you know, is this the plan to have kind of a base dividend and then, you know, sort of a special each year?
Daniel
Yeah, Boze, thanks for the question. You know, I think as you look forward out into 2023, you should expect our return of capital plan to have multiple components the quarterly dividend that we announced earlier last or later last week, as well as some other form of return of capital, whether that be a special dividend, a share buyback, or a combination of the two.
Boze George
Okay, great. Thanks. And then just switching to underwriting, you know, just given the continued very strong home price depreciation You know, are you doing anything, you know, differently in terms of underwriting, you know, the more, the newer loans or are lost expectations, you know, changing, you know, just given this is a strong HPA that's continuing?
Rohit Gupta
Yes, so thanks for the question. I would say we are doing the same things that we do normally in terms of monitoring the market and adjusting our pricing and credit policy actions in alignment with our view off the market, not only at a national level, but also at a geographic level. And as a reminder, one of the benefits of our approach with risk-based pricing is that we are able to make changes on a much more agile basis as we see market conditions evolve. And as a reminder, in 2020, April and May, within a matter of five weeks, we made three pricing changes, increasing our price by 20% as we saw the pandemic kind of start to expand in the country and shut down portions of the country. So I would say that's how we think about our agility, given the fact that we operate in an opaque risk-based pricing environment. I'm not going to specifically comment on pricing actions, but I would say from an underwriting perspective, both in mortgage insurance industry and broadly in mortgage finance industry, from a qualified mortgage definition perspective as well as regulatory rules, the boundaries are much, much better than they used to be pre-global financial crisis. So we have seen credit quality, manufacturing quality still stay at very good levels. And as you saw from our risk metrics, we also continue to see strong portfolio quality from whether you look at the FICO score, whether you're looking at debt-to-income ratio. And the metric we publish in our earnings presentation is also our layered risk. which continues to be at 1.6% for total risk enforced, which is a level we believe can be sustained. And on new insurance written basis, that layered risk metric was actually 0.8%, so even lower than our aggregate risk enforced metric. So that gives us confidence that we are putting on the right books with a macro view in mind. Okay, great. Thanks.
Operator
Thank you. Our next question will come from Jeffrey Dunn from Dowling and Partners. You may begin.
Jeffrey Dunn
Thank you. Good morning. Just a couple, I guess, number of questions to start. Dean, first, is there possible consideration for another dividend up from the OPCO this year, given your current expectations for how the results can play out?
Daniel
Yeah, I think that's... I think that would be part of our capital plan for 2022 is some additional potential distribution or dividend, but just proceeds coming from the operating company to the holding company.
Jeffrey Dunn
Okay. And then I've seen some actuarial suggestions out there with respect to where cancellation rates could go or persistency. And I'm curious if you think, I think it has to go all the way back to 2000, if you exclude the Great Recession years, to see persistency solidly above 80%. Given where we're coming off of rates and the size of the books put on of those rates, does your analysis suggest that we could actually see persistency improve to something more like the mid-80s versus kind of that maybe historical norm of 78, 80%?
Daniel
It's a little harder to predict that, Jeff. For the reasons you just described, we have the combination of large, newer books written at historically low interest rates coupled with a rising interest rate environment, both of which are reasonably new trends to the industry. I would say, just looking at Q1 results of 76% persistency and not having the full weight of interest rates from February and March embedded in them. I think we could see certainly progression back to the long-run normal of 80, but I think it's fair to think that that can go above an 80% long-run historical persistency rate. Okay.
Rohit Gupta
Just, Jeff, one perspective to add to that. I think the one difference would also be I agree with Dean's comments. The embedded equity in homes or in people's – against their mortgages is another thing that is different. With that much embedded equity, do you see people paying off loans more? And we haven't seen that trend in the past but have seen that in the last two years. that consumer savings are up significantly over pre-pandemic time period. The numbers we have seen is close to $2.5 trillion of total consumer savings being higher than pre-pandemic times. And you add home equity to that, does that create some level of prepayments? But I would generally agree with Dean that from what we see in Q1 and the interest rate trend in Q2, we can see these numbers go higher.
Jeffrey Dunn
Okay. And then last, a big picture question on credit. When you think about the ultimate drivers of ultimate credit performance, what is more important, unemployment or home price appreciation? And I'm trying to think of this in terms of where we are today with the buildup of equity relative to concerns about a possible recessionary pressure. What is the bigger factor in the loss models?
Rohit Gupta
Yeah, Jeff, I would say the way you asked the question, I think you're implying that if we were to think about not delinquencies but eventual claims and losses, right?
Jeffrey Dunn
Yeah, just credit. You know, call it credit at the end of the day, the ultimate economic credit loss. What is a more important factor?
Rohit Gupta
So I would say from what we have seen in the recent cycle, if you just extrapolate that, that unemployment went up. We saw a significant increase in delinquencies. And we have been reserving against those delinquencies, but given the home price appreciation that Dean mentioned in his prepared remarks that 97% of our delinquencies have at least 10% equity in front of them, that has been a good mitigant for both frequency and severity. So I would say if you were looking at delinquency development, unemployment is more important. But if you are thinking about a mitigation to eventual claim and eventual loss to our book, a significant rise in home prices acts as a meaningful mitigant to eventual loss. And I'll just ask our chief risk officer, Mike Durstein, to see if he has any additional perspective to add.
Dean
Thanks, Rohit. I would concur with those remarks. Home price appreciation is definitely viewed in our modeling considerations as an important mitigant. I think we've also seen in this environment much less equity extraction in the form of second liens, so we believe that that mitigant is stable through time. So we do believe that that is an important way to think about ultimate credit losses. Home price appreciation will have a benefit to that. Okay. Thank you.
Operator
Thanks, Jeff. Our next question comes from a line over here, Bhatia from Bank of America. You're letting me open.
Jeff
Good morning. Thank you for taking my questions. I guess maybe to start, just wanted to make sure I understand, just in terms of what you've seen recently, maybe on either NIW applications, whatever, in April, like has there been any impact from higher rates on the demand for purchase mortgage originations? Like I understand on the refi side and things like that, but on the core purchase mortgage originations, has there been any impact from the higher rates that you've seen yet?
Rohit Gupta
Yeah, Mayor, very good question, and thanks for that question. I would say when you look at our Q1 results and the general indication of where Q1 origination market is trending based on current estimates, you would see Q1 as a strong market, both on the origination front as well as on the mortgage insurance side, and that's kind of driven by purchase market going down by about 12%, purchase originations and aggregate and refi market obviously going down much more than that. That quarter was at least from our perspective, more aligned with a 3.8% 30-year mortgage fixed rate. As we think about early development in second quarter, interest rates have now risen in the last four weeks closer to 5.4%. So we are keeping an eye on early indicators, and I would say these are just early indicators, not any hard numbers. But if you look at the MBA purchase application, purchase applications for MBA right now on a four-week moving average are down 6% from a month ago. Refinance applications are down way more than that. So it's too early to say where the origination trends go long term. Our perspective is that as we think about our persistency in our business model, that is a strong mitigate, a strong hedge against any pressure on mortgage origination. So when we are thinking about our top line growth and our insurance enforced growth, we look at a combination of how interest rates are trending in the market. And as a result of that, Does our existing insurance enforce trend at a better level in terms of stickiness and then obviously the subsequent impact on new origination? But I would say too early to give an indication on how that sticks in the market in terms of higher interest rates impacting consumer. And I would repeat my comments that we do see this cycle and this economic environment being different, that while we see impact of higher interest rates and higher home price appreciation on consumer affordability, we see that offset by higher consumer savings, a very strong labor market, very low housing inventory as being kind of an offset in terms of that balance between supply and demand.
Jeff
No, that's fair. Thanks for that. And then just wanted to confirm on the expense. I think your guidance for the full year was around $240 million. Obviously, you know, $57 million, a little bit light on that. Any update to that, or should we still think of $240 million for the full year?
Daniel
Yeah, Mihir, thanks for the question. Our costs are not linear throughout the year and tend to increase in later quarters as a result of drivers such as performance-based incentive compensation and others. In addition to that, I'd just call out that we're not complete in our journey of standing up certain public company activities. And while we're well on our way, we still have a little bit more room to go. So I think the 240 guidance that we provided last quarter remains intact. We'll obviously continue to evaluate that through time, but I think that's still a good number. Thank you.
Jeff
And then my last question just wanted to ask about, I'll go back to the capital return discussion a little bit. I mean, it feels like the discussion has been quite focused around dividends, and I understand, like, you know, you just launched a quarterly dividend, but, like, in terms of the incremental capital return that you've talked about, whether in the dividend announcement on the today's announcement. Is there any scope for a buyback to be contemplated there? I mean, your shares are trading, you know, below book value. And I mean, I understand the consideration around liquidity, but is there a way for you to work with parent to, you know, keep their stake steady as you buy back, you know, relatively or anything is that I guess I'm just trying to understand is there, what is the scope for a buyback? in your future capital return plan? And how are you thinking about that versus just, you know, whether it's a special dividend or a higher quarterly dividend? Just trying to understand that, how you're thinking through this.
Rohit Gupta
Thank you for your question. So, absolutely, we are very happy with the results we have produced in terms of returning capital to shareholders at this point of time. With our $1.23 dividend in December of last year and then initiating a quarterly dividend program with the first dividend to be paid out in May of 14 cents per share. And as Dean said in his prepared remarks, that we plan to return additional capital before year end. And we are comfortable with our original expectations that we provided in the market, so that would mean quarterly dividend and special return of capital combined to be in line with what we have shared before. In terms of your question about share buybacks, it's definitely something that we are considering. So we would go through kind of traditional finance 101 analysis in terms of where our shares are trading, how does that compare to our view of intrinsic value of our business. And then in our unique situation, also taking into account our total float and what do we need to think about on that front before we decide what is the right form of capital return between special dividends or share buybacks or a combination of two. So that's definitely something that we are taking into account and discussing with our board, as well as with our majority shareholder, General Financial.
Operator
Thank you. Thank you. Our next question comes from Ryan Gilbert from BPIG. Your line is open.
Ryan Gilbert
Hi, thanks. Good morning, guys. First question is, First question, I wanted to go back to the comments on purchase originations. And I guess, you know, your expectations for a robust purchase origination market in 22, you know, scoring that up against the sharp increase in interest rates that you talked about, MBA purchase applications down 6%. I guess is the basic idea that, and constrained inventory as well, which can limit unit volume, is the basic idea that that home price appreciation is robust enough that it can offset any decline in unit volume that we might see? Is that how you're thinking about purchase originations for the balance of the year, or do you think unit volume can be up as well?
Rohit Gupta
Ryan, that's definitely part of our consideration. So very good question in terms of parsing through the purchase dollar volume. I think the market forecast we have seen on purchase originations estimates for 2022 between Fannie Mae and MBA continue to be between $1.7 trillion to $1.9 trillion. But there is an element in those projections that part of that is driven by home price increase and average loan amount. Then on a unit basis, we continue to be optimistic in terms of the fundamental trend for homeownership has been very strong. We have shared numbers in the past on expected number of people that reach first-time, average first-time home-buying age of 33 years old in the next four years, 22 through 26, as being higher than the previous four years. So we think that there are some fundamental trends that drive that demand, and even with interest rates moving up, with consumer balance sheet being strong and labor market being strong, we think that there's a good balance in this environment. Now, some of that still depends on what is the eventual 30-year mortgage rate for the rest of the year, and how does that compare with other factors like home price appreciation, inflation, and rise in wages. But your point is absolutely correct that we could end up seeing a bigger market than 2021 purchase originations market, and part of that could be driven by HPA versus units.
Ryan Gilbert
Okay, got it. Thanks. My second question is on new DQs, and I know in 1Q they're trending in line with, I guess, normal loss patterns. And as we move into the rest of the year, just given higher levels of macroeconomic uncertainty, how are you thinking about the trend for new DQs and anything that we as analysts or that investors should be considering on that line?
Daniel
Yeah, Ryan, thanks for the question. You know, I think we described the increase. We had about 400 more delinquencies sequentially. They were up about 5%. Driven, you know, largely by the new large book years, the ones Rohit referenced, 2020 and 2021, which represent a significant concentration in our overall portfolio, those books continue to age. and go through their normal kind of loss development pattern, our expectation that that doesn't stop in Q1. They're going to continue to generate delinquencies as they continue to age through that kind of peak part of loss curves. You know, that probably doesn't peak until, you know, years three, years four, something along those lines. So I think there's probably still some room to go for those book years. I think, you know, it'll be interesting to see how the combination of both those large books intersect with some of the smaller books that are producing fewer and fewer new delinquencies. So you have in the first quarter, 2019 and earlier books producing fewer new delinquencies. It's just simply the weight of those was overwhelmed by the concentration in the 2020 and 2021 book years. So I don't think there's anything, that I could give you in terms of guidance on trend that's different than what we provided probably in our prepared remarks, that we have large books. They're continuing to age through normal loss development pattern. That's probably going to continue as we head into the remainder of 2022.
Ryan Gilbert
Okay, great. Thanks very much.
Operator
Thanks, Ryan. Thank you. And I'm not showing any further questions in the queue. I'd like to turn the call back over to Rohit Gupta for any closing remarks.
Rohit Gupta
Thank you, Victor, and thank you all. We appreciate your interest in an act and look forward to speaking with you throughout the year. Have a good day. Bye-bye.
Operator
This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.
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