Black Knight July Mortgage Monitor: "Purchase Lending Highest Since 2007"

Black Knight Financial Services (BKFS) released their Mortgage Monitor report for July today. According to BKFS, 4.51% of mortgages were delinquent in July, down from 4.67% in July 2015. BKFS also reported that 1.09% of mortgages were in the foreclosure process, down from 1.52% a year ago.

This gives a total of 5.60% delinquent or in foreclosure.

Press Release: Black Knight’s Mortgage Monitor: Q2 Originations Hit Three-Year High; Purchase Lending Highest Since 2007, Refinance Volume Still Lags 2015

Today, the Data & Analytics division of Black Knight Financial Services, Inc. (NYSE: BKFS) released its latest Mortgage Monitor Report, based on data as of the end of July 2016. This month, Black Knight looked at first-lien mortgage originations through Q2 2016. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, the data showed significant growth in origination volume; however, refinance volume was not as strong as the current low interest rate environment might suggest.

“Mortgage originations posted their strongest quarter in three years in Q2 2016,” said Graboske. “In total, we saw $518 billion in first-lien mortgage originations in Q2, driven by a combination of continued purchase origination growth and refinance activity spurred by low interest rates. Interestingly however, with interest rates 15 basis points lower than in Q1, and even lower than in early 2015, refinance activity wasn’t nearly as strong as one might have expected. While purchase originations jumped more than 50 percent from Q1, refinances saw only an eight percent increase over that period, and were actually down from the same time last year, despite the number of potential refinance candidates outpacing 2015 by over one million in every month since March. That said, refinance lending has risen for three consecutive quarters and accounted for $221 billion in originations in Q2.

“It was a particularly strong month for purchase originations, which made up 57 percent of all first-lien lending in the quarter,” Graboske continued. “At $297 billion, Q2 purchase originations marked the highest level – in terms of both volume and dollar amount – seen since 2007. Although the purchase lending credit box remains tight, there is increasing participation among ‘moderate’ credit borrowers as well. Two-thirds of Q2 purchase loans went to borrowers with credit scores of 740 or higher – on par with what we saw during the same period last year – but there was a 13 percent year-over-year increase in lending to borrowers with credit scores between 700 and 739. This segment has seen the highest rate of growth over the last three quarters, and now makes up 19 percent of all purchase originations. On the other end of the spectrum, sub-700 score borrowers now account for only 15 percent of originations, with less than five percent going to borrowers with scores of 660 or below. Both of these mark the lowest share of low credit purchase lending seen dating back to at least 2000.”
emphasis added

Click on graph for larger image.

This graph from Black Knight shows first lien mortgage originations.

From Black Knight:

• At $518 billion, first lien mortgage originations marked the highest volume seen in a single quarter since Q2 2013, driven by a combination of continued purchase origination growth and refinance activity spurred by low interest rates

• It was a particularly strong month for purchase originations, which made up 57 percent of all first lien lending in the quarter

• At $297 billion, purchase loan originations saw a 52 percent ($102 billion) seasonal increase from Q1 and hit their highest level in terms of both volume and dollar amount since 2007

• We are seeing a deceleration in purchase market growth on an annual basis at approximately six percent growth over Q2 last year, but down from over 20 percent growth for most of 2015

• Refinance originations rose by 8 percent from Q1, but fell slightly below last year’s levels

The second graph shows the number and percent of distressed sales. From Black Knight:

• Distressed sales accounted for seven percent of all residential real estate transactions in Q2 2016, the lowest such share since Q2 2007, but still more than twice what would be seen in a ‘normal’ market

• At the peak (Q2 2011), there were over 350,000 distressed sales in a single quarter, and distressed sales had accounted for nearly 40 percent of all transactions in Q1 2011; there are now less than 100,000 distressed sales per quarter

• The makeup of the distressed market has been roughly 2/3 REO to 1/3 short sales for roughly two years; at the bottom of the market in 2012, short sales accounted for more than half of all distressed transactions

• Nearly one out of every five distressed sales nationwide still occurs in Florida, but that share is waning as the state’s severely delinquent and active foreclosure inventories continue to improve

• The backlog and slower reduction of troubled inventories in New York and New Jersey has led to more sustained levels of distressed activity in those states

Distressed sales are getting closer to normal.  There is much more in the mortgage monitor.

from
http://feedproxy.google.com/~r/CalculatedRisk/~3/pQa4MYPHthM/black-knight-july-mortgage-monitor.html