Lending

Equifax: Mortgage originations soar 75% from last year

Growth attributed to first mortgages

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Mortgage originations are booming, increasing nearly 75% from last year, according to data from the latest Equifax (EFX) National Consumer Credit Trends Report.

Total mortgage origination balances hit $466 billion in the first quarter, a 74.4% increase from the same time a year ago.

Majority of the growth is attributed to first mortgages, which grew 79.9% versus the first quarter of 2014 to $430 billion.

Originations of home equity lines of credit rose 30% to $30.9 billion and new home equity installment loans climbed 13.6% to $5.0 billion.

“The drop in mortgage rates that began in the fourth quarter of last year kicked off a refinance boomlet that accelerated in the first quarter, as rates fell further, averaging just 3.7% for the first three months of this year,” said Amy Crews Cutts, chief economist at Equifax. “While rates have recently reversed that trend and are back up to about 4%, they remain extremely low historically. These rates, coupled with a housing market that is showing signs of vigor, should carry the mortgage business over the summer.”

“While home sales are hopping, Equifax data also indicates that lending conditions remain very tight, with just 4.5% of new first mortgage accounts going to consumers with credit scores below 620, a measure often used to describe subprime credit. In the first quarter of 2008, over 10% of first mortgages went to subprime-credit borrowers,” Cutts continued.

Additionally, the number of first mortgages originated in the first three months of the year was 1.78 million, a 54.9% increase over the same time a year ago and 13.6% higher than in the fourth quarter of 2014.

For the subprime market, the share of first mortgage accounts originated in the first quarter that went to consumers with an Equifax Risk ScoreSM below 620 (generally considered subprime) was 4.5%.

The average loan amount for a first mortgage originated to a borrower with a subprime credit score in March 2015 was $152,260, up 9.9% from March 2014.

Furthermore, 3.1% of newly originated balances in the first quarter went to borrowers with subprime credit scores. For the same time a year ago, the share was 3.5%.  

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