Black Knight's September Mortgage Monitor: Recent Surge in Purchase Originations Driven Primarily by High-Credit Borrowers

-- June 2015 saw highest level of purchase lending since 2007; early Q3 figures up approximately 11 percent from year ago

-- Only 20 percent of purchase loans in last three months to borrowers with <700 credit scores; lowest in over 10 years

-- Refinance activity dropping most sharply among high-credit borrowers due to "refi burnout"

-- Reduction in high-credit-score refinance volume giving false impression of credit loosening

Nov 02, 2015, 09:00 ET from Black Knight Financial Services, Inc.

JACKSONVILLE, Fla., Nov. 2, 2015 /PRNewswire/ -- 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 September 2015. This month's data showed that the recent increase in purchase mortgage originations has been driven primarily by high-credit borrowers (those with credit scores of 700 or higher), while a corresponding decline in refinance originations among the same borrowers is signaling prepay burnout from currently low interest rates and is leading some to the false conclusion that credit is loosening. As Black Knight Data & Analytics Senior Vice President Ben Graboske explained, the two factors are related.

"Purchase mortgage originations are up significantly in 2015," said Graboske. "Q2 2015 purchase originations were up 15 percent from the same quarter in 2014. In June, we saw the highest level of purchase lending since June 2007 and early Q3 figures show purchase originations are up 11 percent from the same period last year. What's striking about this rise, though, is that it's being driven almost entirely by high-credit borrowers. Year-over-year comparisons of purchase originations from sub-700 credit score borrowers show that purchase volumes from lower-credit borrowers are actually flat to slightly down from last year's levels. Only 20 percent of purchase loans originated in the past three months have gone to borrowers with credit scores below 700. That's the lowest level we've seen in well over 10 years. The weighted average credit score for purchase mortgages has also hit an all-time high of about 755.

"At the same time, refinance originations have been steadily declining since March, signaling a degree of 'burnout' as those both interested and able to take advantage of currently low interest rates likely already have refinanced. We've also noticed that prepayment speeds -- historically a good indicator of refinance activity -- as well as refinance originations have been dropping most significantly among these same high-credit borrowers. In contrast to purchase mortgages, we've seen average credit scores for refinance originations decline, which has some suggesting that credit is loosening for these products. As these higher-credit borrowers -- in many cases, 'serial refinancers' who have repeatedly taken advantage of drops in interest rates and their good credit standings -- hit 'refi burnout,' and total originations decline, lower-credit borrowers make up a larger share of total volume, and weighted average credit scores for the total population naturally decline. It's not an indicator of loosening credit standards at all."

Black Knight also looked at some key Q3 2015 mortgage performance indicators and found that as of the end of the quarter, all but five states had seen reductions in their foreclosure inventories. As Graboske noted, one state's improvement stood out in particular.

"As of the end of September," he said, "Florida has ended its 8-year reign as having the highest number of loans in active foreclosure in the U.S. Over the past 12 months, the state has reduced its inventory of loans in active foreclosure by 43 percent. That's nearly twice the national average of 22.5 percent. Florida, however, still has the largest number of properties 90 or more days past due but not yet in foreclosure. New York -- which has seen only a 19 percent reduction in its foreclosure inventory over the past year -- has now taken Florida's place as the state with the most loans in active foreclosure."

In other Q3 findings, Black Knight observed that while foreclosure starts were up slightly from Q2, driven by a rise in repeat foreclosure starts (as reported in last month's Mortgage Monitor), first-time foreclosure starts in Q3 were at their lowest level in more than 10 years and 35 percent below 2005 pre-crisis levels. Foreclosure sale volume (i.e., completed foreclosures) in Q3 was down 10 percent from Q2 2015, and reached the lowest level since 2006. Finally, both 30-day and 60-day delinquencies saw quarterly increases due to market seasonality in Q3, rising 4.7 and 5.6 percent respectively, while 90-day delinquencies continued their long-term trend of improvement, declining 4.3 percent for the quarter and more than 25 percent from last year.

As was reported in Black Knight's most recent First Look release, other key results include:

Total U.S. loan delinquency rate:


Month-over-month change in delinquency rate:


Total U.S. foreclosure pre-sale inventory rate:


Month-over-month change in foreclosure pre-sale inventory rate:


States with highest percentage of non-current* loans:


States with the lowest percentage of non-current* loans:


States with highest percentage of seriously delinquent** loans:


*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.

**Seriously delinquent loans are those past-due 90 days or more.

Totals are extrapolated based on Black Knight Financial Services' loan-level database of mortgage assets.

About the Mortgage Monitor The Data & Analytics division of Black Knight Financial Services manages the nation's leading repository of loan-level residential mortgage data and performance information on the majority of the overall market, including tens of millions of loans across the spectrum of credit products and more than 160 million historical records. The company's research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for the monthly Mortgage Monitor Report. To review the full report, visit:

About Black Knight Financial Services, Inc.  Black Knight Financial Services, Inc. (NYSE: BKFS), a Fidelity National Financial (NYSE: FNF) company, is the mortgage and finance industries' leading provider of integrated technology, data and analytics solutions that facilitate and automate many of the business processes across the mortgage lifecycle.

Black Knight Financial Services is committed to being the premier business partner that lenders and servicers rely on to achieve their strategic goals, realize greater success and better serve their customers by delivering best-in-class technology, services and insight with a relentless commitment to excellence, innovation, integrity and leadership. For more information on Black Knight Financial Services, please visit

SOURCE Black Knight Financial Services, Inc.