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Subprime Share Up as Mortgage Originations Fall

Although the volume of mortgages closed has fallen, the share that are considered subprime has inched higher. Home-equity originations have strengthened.

From Jan. 1, 2017, through Aug. 31, U.S. home lenders originated 4.85 million first mortgages that had an aggregate balance of $1.1749 trillion.

Based on the number of loans, originations were down 9.9 percent from the same seven-month period in 2016. The dollar volume of production retreated 10.8 percent.

Those details were reported Tuesday by Equifax.

The report indicated that subprime share of year-to-date dollar volume was 4.4 percent, increasing from 4.0 percent in the same period during 2016. Subprime loans are those to borrowers with VantageScores of less than 620.

Home-equity loan originations came to 508,200 units for $21.5 billion. The number of HELs closed increased 9.2 percent, while the dollar volume rose 14.1 percent.

There were 974,200 home-equity lines of credit originated during the seven-month period last year with total credit limits of $108.3 billion — a nine-year high. The number of HELOC originations inched up 1.4 percent, while the collective credit limits were 2.4 percent higher.

Subprime share of originated HELOCs was 1.4 percent of total lines, up from 1.3 percent the preceding year.

There were 49.64 million first mortgages outstanding with an aggregate unpaid principal balance of $8.670 trillion as of Oct. 31, 2017. The nation’s book of first mortgages from 48.98 million loans for $8.220 trillion on the same date in 2016.

HELs outstanding came to 4.48 million loans for $143.1 billion. The number outstanding was
down 2.8 percent and the principal balance fell 4.0 percent.

Based on the principal balance, first-mortgage delinquency of at least 90 days was 1.05 percent as of the end of October, down 2 basis points from
a month earlier and 28 BPS better than a year earlier.

Serious HEL delinquency rose 3 BPS from Sept. 30 to 1.22 percent. But the rate was down 19 BPS from Oct. 31, 2016.

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