Originations spike as delinquencies dwindle

by Ryan Smith20 Sep 2013

Mortgage originations are up 10% from a year ago, according to data released Thursday by credit reporting and analytics firm Experian. Home purchases also surged in the second quarter, rising 29% from the prior quarter, while refinancings fell.

"The key statistic in the real-estate market is the change in the ratios of refinances versus home purchases, with purchases making up a much greater proportion of the total origination volume," said Alan Ikemura, senior product manager and business consultant, Experian Decision Analytics. "…Despite a 7% decrease from the previous quarter in refinancing activity, home purchases grew by 20 percent year over year and 29% quarter over quarter, and this is where we can begin to see some of the real-estate recovery taking place."

Experian’s data also showed a reduction in distressed-home sales, while conventional sales increased. Sales of distressed properties from foreclosures and short sales fell from 25% last year to 15% this year, as conventional sales of existing homes spiked 32% year-over-year.

There was also a spike in home equity lines of credit – “the first major jump of this kind since the recession,” according to Experian. The number of borrowers taking out home equity lines of credit increased 30% this quarter and year-over-year.

“"We continue to see a very conservative lending approach, with nearly 90% of HELOCs still coming from super-prime and prime consumers," said Ikemura.”However, there is an opportunity for more people to actually participate in getting a home-equity line because of home price improvements. This trend is likely to continue as we see more homeowners move into a better equity position." 

Experian’s data also showed a drop in mortgage delinquencies. Short-term delinquencies, which have been at less than 2% for a year and a half, dropped to 1.51% for the quarter. Long-term delinquencies also dropped, down 1.32% for the quarter. Midterm delinquencies saw a slight increase but have been at less than 1% for a year and a half, Experian reported.


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