PMI price war. PMI companies have apparently stopped colluding.

[Chris Mason]

For whatever reason, a lot of the big PMI outfits have dropped their PMI rates in the last couple months. Speculation abounds inside the mortgage industry about what prompted it. Your monthly PMI cost should drop from what you were quoted at preapproval 3 or 6 months ago, due to this recently emerging price war among the big PMI outfits.

For context, a year ago all the PMI companies would return the exact same pricing for nearly all scenarios, which strongly implied price fixing to me even though I've no specific proof of this. I wouldn't even bother shopping it if I didn't have a ratified contract, since I knew the pricing would almost always come back identical. I even had most scenarios memorized, and in my post history you can find lots of "oh, that scenario, your PMI will be 2.15%" or "if you do 15% down, your PMI will be 0.19%." And I could make these posts accurately without even looking it up, since all the companies were exactly identical & with perfectly stagnant pricing that hadn't changed in years. Now, that's no longer the case! We're presently - and all of a sudden - seeing variance, competition, price drops, and all that fun sort of open market functional capitalism stuff.

Reminder that PMI is not just "yes/no" with the same monthly cost for everyone that's a "yes." It can vary by a full factor of 10, since it's insurance just like car insurance. The 20 year old with a DUI that commutes 2 hours each day in his Firebird that he works on himself will pay more than the soccer mom with a Toyota with a clean record who takes it in for servicing every 10k miles. Same thing for PMI. PMI varies greatly. It's insurance. You do not see the note rate be 10x higher (from 4.25% to 42.5%) due to your FICO, LTV, and unit count, but we see that much variance (>10x, like the 0.19% v 2.15% examples above) on PMI on a regular basis... And now it's going to be a bit more cost effective, moving forward. The action with less than 20% down is almost always in the PMI more than anything else, and now this is more true than in the past.