Average Mortgage Loan Age Reaches All-Time High

Mortgage loans are aging, particularly loans to borrowers with lower credit scores, according to the latest data from Jacksonville, Florida-based Black Knight Financial Services. In fact, the average loan age is currently at an all-time high of 54 months, according to the firm.

The average mortgage loan age has been on the rise for about nine years, although the uptick in loan originations last year brought on a "temporary slowdown," according to Black Knight.

Loan age often varies by credit score, but Black Knight found the recent aging is most prominent among loans to borrowers with credit scores below 700. Loans to borrowers with credit scores of 750 or above have changed little over the past few years, while loans with lower credit scores "have seen dramatic increases in average age," said Kostya Gradushy, manager of research and analytics at Black Knight Financial Services.

Some of the aging among lower-credit-score loans might stem from the fact that some lower-credit-score borrowers have improved their credit scores since their loans were originated.

Black Knight pointed out that 9 percent of today's borrowers have credit scores below 719 but have higher scores today than when their loans were originated.

It is also important to note that most recently-originated loans have gone to borrowers with high credit scores. In fact, the "share of purchase originations with high credit scores is at an all-time high," according to Black Knight. This fact aligns with Gradushy's observation that 2012-2014 vintage loans have lower delinquency rates than any vintages in the previous seven years.

However, Gradushy also pointed out that "even among borrowers with lower credit scores, these vintages are outperforming all previous vintages."