[1]Mortgage originations have seen tremendous growth this year, according to Equifax [2]'s National Consumer Credit Trends Report. [3] The report found that mortgage origination balances reached $466 billion in the first quarter, a 74.4 percent increase from the same time a year ago.
First mortgages increased 79.9 percent compared to the first quarter of 2014 to $430 billion, leading this growth spurt, according to Equifax. Meanwhile, originations of home equity lines of credit (HELOCs) increased 30 percent to $30.9 billion and new home equity installment loans climbed 13.6 percent to $5 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 percent 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 percent, 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."
The National Consumer Credit Trends Report draws from data on the Equifax U.S. Consumer Credit database of more than 210 million consumers, the company said. The database provided information on population-level debt and lending insights, including originations, balances, number of loans, delinquencies, and more.
The Equifax report determined that average first-lien mortgage loan amounts reached $232,547 in March, an 11.5 percent increase from March 2014. There were 1.78 million first mortgages in the first three months of 2015, this was an increase of 54.9 percent from the same time last year and 13.6 percent higher than the last quarter.
The share of first mortgage accounts originated in the first quarter that went to consumers with a subprime Equifax Risk ScoreSM below 620 was 4.5 percent, Equifax reported. Approximately 3.1 percent of newly originated balances in the first quarter went to borrowers with subprime credit scores. The average loan amount for a first mortgage originated to a borrower with a subprime credit score in March 2015 increased by 9.9 percent to $152,260.
"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,” Cutts said. “In the first quarter of 2008, over 10 percent of first mortgages went to subprime-credit borrowers."
Additional data from the Equifax National Consumer Credit Trends Report includes:
Home Equity Lines of Credit (HELOC)
- The total credit limit originated in Q1 was $30.9 billion, a year-over-year increase of 30.1 percent.
- In that same time, more than 285,700 new accounts were originated, a year-over-year increase of 21.2 percent and the highest level since 2008.
Home Equity Installment
- The total number of new loans originated in Q1 was more than 142,800, a 19.6 percent increase from same time a year ago.
- Similarly, the total balance of new loans in that same time were $5 billion, an increase of 13.8 percent.
Click here to view Equifax's National Consumer Credit Trends Report. [3]