Purchase Lending in Q2 Hits Nine-Year High

Mortgage originations during the second quarter reached a three-year high as purchase lending achieved its highest level since 2007, according to new data from Black Knight Financial Services (BKFS).

During the second quarter, first-lien mortgage originations totaled $518 billion, the highest single-quarter volume since the second quarter of 2013. And purchase loan originations totaled $297 billion, a 52 percent spike from the first quarter and a nine-year high for both volume and dollar amount. Two-thirds of the second quarter’s purchase lending involved borrowers with credit scores of 740 and higher, but the largest year-over-year growth of mortgage customers involved the 13 percent increase in borrowers with credit scores between 700 and 739.

“This segment has seen the highest rate of growth over the last three quarters, and now makes up 19 percent of all purchase originations,” said Black Knight Data & Analytics Executive Vice President Ben Graboske. “On the other end of the spectrum, sub-700 score borrowers now account for only 15 percent of originations, with less than five percent going to borrowers with scores of 660 or below. Both of these mark the lowest share of low credit purchase lending seen dating back to at least 2000.”

Black Knight also determined that while refinance lending has risen for three consecutive quarters, its year-to-date volume remained below 2015 levels. The company also reported that distressed sale activity accounted for seven percent of all second quarter residential transactions, the lowest level in nine years.