NEW YORK: MGIC Investment Corporation, the mortgage insurer that breached regulators' capital limits, jumped in New York trading after a report on October home prices showed values beat forecasts, signaling a sustained recovery, Bloomberg reported on Wednesday.
MGIC surged as much as 12 per cent and was up 9.6 per cent to $2.62 at 10:51 a.m. The Milwaukee-based firm has slid 30 per cent this year.
Rival Radian Group Inc. rose 3.9 per cent today.
The S&P/Case-Shiller index of property values in 20 cities increased 4.3 per cent from October 2011, the biggest 12-month advance since May 2010.
Rising home prices can reduce the gap between the value of a home and how much a borrower owes. They can also lower costs for mortgage insurers, which cover losses when homeowners default and foreclosures fail to recoup costs.
"You have higher recovery values," said Jason Stewart, an analyst at Compass Point Research & Trading LLC in Washington . "Higher values of homes improve the ratio of borrowers that go into default because there's less people with negative equity."
