Equifax: Subprime Loans Hold Steady for 3rd Straight Year
Equifax, Atlanta, reported total mortgage volume increased in the first quarter rose compared to previous years, while subprime loan volume held steady for the third straight year.
The company’s National Consumer Credit Trends Report reported 1.86 million new first mortgages in the first quarter, a 10.3 percent increase from a year ago. Home equity installment loans rose by nearly 24 percent to 182,400, an eight-year high; and home equity lines of credit totaled nearly 315,000, a 10.2 percent increase.
The report also noted lending to borrowers with subprime credit scores (consumers with an Equifax Risk Score of 620 or below) as a share of total lending held steady for the third consecutive year. New first mortgage accounts to subprime borrowers during the first quarter increased on a consistent basis alongside that of prime lending, with 95 percent accounting for prime loans and 5 percent accounting for subprime loans.
“Mortgage lending and underwriting practices appear to have maintained their rigor over the last three years.” said Amy Crews Cutts, chief economist for Equifax. “We anticipate that the second quarter of 2016 will maintain this trend. And later this year, the much-anticipated addition of trended credit data to the mortgage underwriting process will help to strengthen the marketplace further by helping to statistically separate lower risk borrowers from those presenting higher risk.”
Other report data:
–First mortgage originations in the first quarter totaled $450.5 billion, a year-over-year increase of 12.3 percent, the highest amount for a first quarter total since 2013;
–Total balance of new mortgages originated for borrowers with subprime credit scores in that same time was $16.2 billion, a year-over-year increase of 38.7 percent;
Home Equity Installment Loans
–Total balance of new loans originated for borrowers with subprime credit scores in the first quarter rose to $454.9 million, an increase of 28 percent;
–Total origination balance on all loans rose to $5.87 billion, an increase of 14.1 percent;
–Average loan amount on new subprime home equity installment loans increased 9.6 percent from Q1 2015-2016, while in that same time the average loan amount on all home equity instalment loans increased 1.7 percent.
Home Equity Lines of Credit
–Total credit limits of new loans originated in the first quarter rose to $35.2 billion, a year-over-year increase of 14 percent and an eight-year high;
Total credit limits on new subprime loans in the first quarter rose to $169.6 million, an increase of 10.7 percent from a year ago.
