Mortgage Loan Originations Lowest on Record

Black Knight's February Mortgage Data shows Monthly Loan Originations Lowest on Record.

Key Points

• Origination volume is the lowest on record with prepay speeds signaling more drops in refi originations
• Monthly sales were essentially flat year over year, but traditional sales were up almost 15%
• The government share of originations has decreased, led by a sharp drop in HARP originations
• Credit standards have shown few signs of loosening, with very little origination activity in the lowest credit score buckets
• Modification re-default rates for underwater borrowers about 30 percent higher than those with equity

February’s data showed the continued trend of declining origination activity we’ve been observing since mid-2013, with monthly originations falling to their lowest recorded point since at least 2000. In spite of this decline, residential real estate sales have remained strong due at least in part to investor activity and the fact that cash sales account for almost half of all transactions. In addition, while total transaction levels were flat on a year-over-year basis, traditional (or “non-distressed”) sales were up almost 15 percent from last year as the share of distressed transactions continues to decrease. Credit standards have shown little sign of easing -- only about 30 percent of 2013 loans went to borrowers with credit scores below 720 -- which indicates that significant opportunity to expand mortgage origination activity is available, if risk appetites allow.