Although the dollar volume of quarterly purchase-money production has recently risen, the number of loans closed has fallen thanks to the lack of junior-lien utilization.
From April 1 through June 30 of this year, U.S. residential lenders generated $467 billion in first-lien mortgage originations — including refinances and purchase financing.
That represented a 20 percent improvement from the upwardly revised total for the first-quarter 2017. But mortgage bankers slowed production from the same three months last year last year by 16 percent.
Black Knight Financial Services Inc. reported the details in its
Mortgage Monitor Report for July.
Refinance production was down 20 percent from the first quarter to approximately $145 billion. Refinance share of 31 percent was the lowest since 2000.
The origination of loans to finance a home purchase increased 57 percent to $321 billion — the best quarter since 2007. The rise in purchase-money production was seasonal.
But the growth in purchase volume was the result of higher average loan amounts, as the number loans closed is still 30 percent below pre-crisis averages.
Black Knight noted that the average $286,000 purchase-money loan amount was near its all-time high.
“While purchase originations appear strong from a total dollar amount perspective, the market still does not appear to be performing at peak capacity when looking at purchase origination counts,” the report stated.
Also boosting the average purchase loan amount was the lack of second-lien
mortgages that had been frequently used before the credit crisis.
Black Knight said that 74 percent of second-quarter 2017 purchase originations were borrowers with credit scores of at least 720. The share was just 47 percent during the pre-crisis years from 2000 through 2003.
But subprime purchase financing has fallen by 65 percent compared to pre-crisis originations.
