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Mortgage Originations Spiked by Positive National Credit Data

applicationMortgage originations in the housing market rose significantly over the last year thanks to the positive overall credit picture in the U.S., along with a rise in the national VantageScore credit score.

New data from Experian's State of Credit study showed that mortgage originations increased by 42.5 percent over the last year. The national VantageScore rose three points from 666 to 669 over the past year and is up by five point since 2013.

“If I were to give a grade to the overall picture of credit in the United States, I would give it an A minus," said Michele Raneri, VP of analytics and new business development, Experian. "I’m optimistic about the state of credit as we are seeing more loans being extended, late payments are decreasing and consumers are continuing to gain more confidence in originating loans."

According to the Experian data, the state of Minnesota has the highest average credit score, with three of its cities (Mankato, Rochester, and Minneapolis) occupying the top three spots with average scores of 706, 705, and 704, respectively.

exThe Experian report found that the top 10 cities with the highest credit scores experienced a 1.8-point increase in their scores.

On the other end of the spectrum, Greenwood, Mississippi has the lowest average credit score at 612, followed by Albany, Georgia and Riverside, California with average scores of 622 and 624, respectively.

“There definitely is growth and momentum—we’re back to pre-recession levels in nearly every category, which means lenders are in a prime position to capitalize on this market and foster business growth,” Raneri noted.

Earlier this month, purchase mortgage originations rose significantly in 2015, driven by high-credit borrowers, according to Black Knight Financial Services’ latest Mortgage Monitor Report.

The data showed that purchase loans increased 11 percent year-over-year in the third quarter, while purchase originations were 15 percent higher in the second quarter of 2015 compared to the prior year. In addition, in June 2015, purchase lending reached its highest point since June 2007.

“The increase in purchase originations is being driven entirely by high-credit borrowers,” the report stated.

Meanwhile, only 20 percent of purchase loans in the past three months have gone to borrowers with a <700 credit score, the lowest level in over 10 years.

Click here to view Experian's complete report.

About Author: Xhevrije West

Xhevrije West is a writer and editor based in Dallas, Texas. She has worked for a number of publications including The Syracuse New Times, Dallas Flow Magazine, and Bellwethr Magazine. She completed her Bachelors at Alcorn State University and went on to complete her Masters at Syracuse University.
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