Black Knight: 1Q Mortgage Originations Tumble

Black Knight Financial Services, Jacksonville, Fla., said first quarter mortgage originations fell by nearly one-third as refinance applications dropped by nearly half.

The company’s Mortgage Monitor report said overall mortgage originations fell by 34 percent in the first quarter from the fourth quarter. Refinance originations fell by 45 percent.

The report said $372 billion in first-lien mortgages originated in the first quarter, down by 9 percent from a year ago to the lowest point seen since fourth quarter 2014. While quarterly purchase originations increased by 3 percent but were down by 21 percent from a year ago; refinance originations fell to 45 percent in the first quarter from 54 percent in the fourth quarter.

Black Knight Data & Analytics Executive Vice President Ben Graboske said the declines are rooted in the upward interest rate shift seen in the fourth quarter.

“Purchase lending was up year-over-year, but the 3 percent annual growth is a marked decline from Q4 2016’s 12 percent and marks the slowest growth rate Black Knight has observed in more than three years going back to Q4 2013,” Graboske said. “At that point in time, interest rates had risen abruptly–very similarly to what we saw at the end of 2016–and originations slowed considerably. The same dynamic is at work here.”

The report noted not only are refinances making up a smaller share of the market, but average credit scores have fallen as well. The average Q1 refinance credit score was 742, down from 751 in Q4 2016 and the lowest average credit score since Q3 2014. “Both of these factors could have a dampening factor on mortgage performance, holistically speaking,” Graboske said.

Other report highlights:
–Total U.S. loan delinquency rate: 4.08 percent, down by nearly 13 percent month over month.
–Total U.S. foreclosure pre-sale inventory rate: 0.85 percent, down by 3.47 percent month over month.
–States with highest percentage of non-current loans: Mississippi, Louisiana, Alabama, West Virginia and Maine.
–States with lowest percentage of non-current loans: Oregon, Montana, Minnesota, North Dakota and Colorado.
–States with highest percentage of seriously delinquent loans: Mississippi, Louisiana, Alabama, Arkansas and Tennessee.