The Data and Analytics division of Black Knight Financial Services (formerly the LPS Data & Analytics division) has released its November Mortgage Monitor Report, which found that loans originated in 2013 are proving to be the best-performing mortgages on record. In addition, while overall originations are at their lowest levels since 2010, the past year has seen a significant increase in the volume of home equity loans and lines of credit.
"Looking at the most current mortgage origination data, several points become clear," said Herb Blecher, senior vice president of Black Knight Financial Services' Data & Analytics division. "First is that heightened credit standards have resulted in this year being the best-performing vintage on record. Even adjusting for some of these changes, such as credit scores and loan-to-values, we are seeing total delinquencies for 2013 loans at extremely low levels across every product category. Secondly, while overall volumes are down, we are seeing an increased proportion of the market being supported by non-agency (vs. government) lending—with the share nearly doubling as compared to 2010."
The November data also showed that the population of "refinancible" mortgages has decreased by about four million loans since the end of 2012. Today, just 5.9 million loans meet broad-based refinance criteria, including loan-to-value ratios of 80 percent or less; credit scores of 720 or higher; current payment status; and interest rates higher than the prevailing interest rate. However, loosening of credit standards, even slightly, could have a significant effect. As an example, lowering the credit score criteria to 700 increases the refinancible population by almost 17 percent, or an additional one million loans.
"Although tighter credit requirements, coupled with interest rate increases, have helped drive originations down to their lowest level since 2010, thanks to increasing home prices, we have seen a significant increase in home equity lending," said Blecher. "While first mortgage originations are almost half the levels as one year ago, total home equity lending, including loans and lines, has increased by 70 percent, and originations of second lien home equity loans have more than doubled. Finally, in the first lien market, we also observed a 75 percent year-over-year increase in the share of non-agency jumbo prime lending. Notably, nearly all of these jumbo loans have been originated with no mortgage insurance, which may indicate an increased appetite for risk, as well as an opportunity to expand credit criteria, for originations within the private market."
As was reported in LPS' First Look release, New Jersey has overtaken the "sand state" of Florida in terms of total non-current loans. Non-current rates in both New Jersey and New York are now on par with Florida and Nevada, and twice that of either California or Arizona. Other key results include:
►Total U.S. loan delinquency rate: 6.45 percent
►Month-over-month change in delinquency rate: 2.63 percent
►Total U.S. foreclosure presale inventory rate: 2.50 percent
►Month-over-month change in foreclosure presale inventory rate: -1.72 percent
►States with highest percentage of non-current loans: Mississippi, New Jersey, Florida, New York and Louisiana
►States with the lowest percentage of non-current loans: Colorado, Montana, Alaska, South Dakota and North Dakota