• Loan originations declined to the lowest point since November 2008
• Property sales remained relatively strong, supported by increased cash purchases
• Approximately 709,000 HARP-eligible loans vs. 2,306,000 in Jan. 2013
• 2013 home equity lending up 26 percent vs. 2012, but still down over 90 percent from 2006
• HELOC performance in recent vintages is pristine, but new problem loan rates continue to rise for those beginning to amortize

JACKSONVILLE, Fla. — March 4, 2014 — Today, the Data and Analytics division of Black Knight Financial Services released its latest Mortgage Monitor Report, looking at data as of the end of January 2014. Black Knight observed a general decline in the overall “refinancible” population of both traditional and HARP-eligible borrowers with associated loan origination volumes dropping in both categories as well.

“In January, we saw origination volume continue to decline to its lowest point since 2008, with prepayment speeds pointing to further drops in refinance-related originations,” said Herb Blecher, senior vice president of Black Knight Financial Services’ Data & Analytics division. “Overall originations were down almost 60 percent year-over-year, with HARP volumes (according to the most recent FHFA report) down 70 percent over the same period. These declines are largely tied to the increased mortgage interest rate environment, which is having a significant impact on the number of borrowers with incentive to refinance. A high-level view of this refinancible population shows a decline of about 13 percent just over the last two months. 

“Of course, in addition to higher interest rates, a good deal of this decline can be attributed to the fact that a majority of those who could refinance at historically low rates in recent years already have, and we see a similar dynamic in terms of HARP-eligible loans. The volume of HARP refinances over the past year has driven this population down to about 700,000 loans in January 2014, as compared to over 2.3 million at the same time last year. From a geographic perspective, outside of Florida and Nevada, we see the Midwestern states of Illinois, Michigan, Missouri and Ohio have among the highest percentage of HARP eligibility.”

However, while loan origination volume has declined year-over-year, property sales activity remained relatively strong through year-end 2013, with December’s monthly sales up 3.7 percent year-over-year and full year 2013 up 8.4 percent vs. 2012. Fourth-quarter sales were bolstered by a jump in the percentage of cash sales, to over 40 percent of the total, up from about 25 percent in the prior year.

The most recent data also marked 2013 as the first year in which home equity lending had increased since 2006 — though total home equity volumes (including both loans and lines of credit) were still down more than 90 percent from that time. Black Knight found that the current resurgence in home equity origination is concentrated in so-called “super-prime” borrowers, with average credit scores for first- and second-lien HELOCs at 786 and 779, respectively. This concentration has paid off in terms of loan performance: delinquency rates on HELOCs originated over the past four years have averaged at just 0.1 percent. At the same time, HELOCs originated prior to 2004 (and therefore in the amortizing stage of the loan) are seeing increased rates of new problem loans — up 27 percent year-over-year as of January.

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