The purchase market is booming, fueling the overall mortgage market and helping set the highest first-lien mortgage originations volume in a single quarter since the second quarter of 2013, the latest Black Knight Financial Services Mortgage Monitor Report found, based on data as of the end of July 2016.
In the second quarter of 2016, purchase loan originations increased 52% ($102 billion) from the first quarter, reaching the highest level in terms of both volume and dollar amount since 2007.
This in turn helped bring in first-lien mortgage originations in the second quarter to $518 billion.
Black Knight Data and Analytics Executive Vice President Ben Graboske explained that a combination of continued purchase origination growth and refinance activity spurred by low interest rates drove the growth in first-lien mortgage originations in the quarter.
According to the most recent Freddie Mac mortgage rate report, the 30-year fixed-rate mortgage sits at 3.46%.
Falling in line with recent industry reports, the Black Knight report also hit on today’s tight credit environment.
According to the report, two-thirds of Q2 purchase lending went to 740+ credit score borrowers, which is on par with last year, and the largest growth (13% year-over-year) was seen in moderate credit borrowers (700-739).
“Although the purchase lending credit box remains tight, there is increasing participation among ‘moderate’ credit borrowers as well,” said Graboske. “This segment has seen the highest rate of growth over the last three quarters, and now makes up 19% of all purchase originations.”
“On the other end of the spectrum, sub-700 score borrowers now account for only 15% of originations, with less than 5% going to borrowers with scores of 660 or below,” he said. “Both of these mark the lowest share of low credit purchase lending seen dating back to at least 2000.”