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Credit Scores for Mortgage Borrowers Decline

Mortgage balances, which form the largest component of household debt rose substantially, even as median credit scores of newly originating borrowers declined during the last quarter of 2017 according to data from the quarterly report on Household Debt and Credit released by the New York Federal Reserve.

Looking at overall household debt, the report indicated that aggregate household debt balances increased for the fourteenth consecutive quarter to 13.15 trillion by the end of 2017, and were $473 billion higher than the previous peak recorded in the third quarter of 2008 when they touched $12.68 trillion. Household indebtedness increased 1.5 percent from the third quarter of 2017.

When it came to mortgage balances, which form the largest component of household debt, the report found that mortgage balances on consumer credit reports stood at $8.88 trillion, an increase of $139 billion from the third quarter of 2017. Balances on HELOCs declined again, by $4 billion and stood at $444 billion at the end of the quarter.

According to the report, new extensions for credit also declined slightly in the fourth quarter with mortgage originations, including refinanced mortgages, at $452 billion, down from $479 billion in the previous quarter. The median credit score for mortgage borrowers also declined slightly from 760 to 755 during the last quarter of 2017.

The last quarter also saw $452 billion in newly originated mortgage debt, while mortgage delinquencies continued to decline with 1.3 percent of mortgage balances being 90 or more days delinquent in December 2017. The report indicated that delinquency transition rates for current mortgage balances improved with 0.9 percent of current balances transitioning to delinquency. Approximately, 70,000 individuals had a new foreclosure notation added to their credit reports between October 1 and December 31, 2017 the report said.

About Author: Radhika Ojha

Radhika Ojha, Online Editor at the Five Star Institute, is a graduate of the University of Pune, India, where she received her B.A. in Commerce with a concentration in Accounting and Marketing and an M.A. in Mass Communication. Upon completion of her master’s degree, Ojha worked at a national English daily publication in India (The Indian Express) where she was a staff writer in the cultural and arts features section. Ojha also worked as Principal Correspondent at HT Media Ltd and at Honeywell as an executive in corporate communications. She and her husband currently reside in Dallas, Texas. You can contact her at Radhika.Ojha@theMReport.com.
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