Mortgage credit risk increased between the third quarter of 2016 and the same period this year
Mortgage credit risk increased between the third quarter of 2016 and the same period this year.
CoreLogic says that its Housing Credit Index was 111.1, an 18 point rise from a the 93.1 seen in Q3 2016. However, this means that it remained within the index’s benchmark range of 90-120.
CoreLogic’s chief economist Dr Frank Nothaft said that the increase was partly due to the shift in the market to purchase loans, which are typically higher risk.
“Further, the Index shows higher risk attributes for both purchase and refinance loans, although the risk levels still remain similar to the early 2000s,” he added. “When looking at the two most recent quarters in which the mix of purchase and refinance loans were similar, the CoreLogic Housing Credit Index for each segment remained stable.”
Looking deeper at the data, the average credit score of borrowers in the third quarter of 2017 was up 7 points from a year earlier at 746. The share of borrowers with a score below 640 was just 2%, far below the peak 25% of 2001.
The average DTI of borrowers was unchanged from a year earlier at 36 while LTV was 84.9%, down 2 percentage points from a year earlier.
“Looking forward to 2018, with continuing economic and home price growth, we expect credit-risk metrics to rise modestly,” said Dr Nothaft.
CoreLogic says that its Housing Credit Index was 111.1, an 18 point rise from a the 93.1 seen in Q3 2016. However, this means that it remained within the index’s benchmark range of 90-120.
CoreLogic’s chief economist Dr Frank Nothaft said that the increase was partly due to the shift in the market to purchase loans, which are typically higher risk.
“Further, the Index shows higher risk attributes for both purchase and refinance loans, although the risk levels still remain similar to the early 2000s,” he added. “When looking at the two most recent quarters in which the mix of purchase and refinance loans were similar, the CoreLogic Housing Credit Index for each segment remained stable.”
Looking deeper at the data, the average credit score of borrowers in the third quarter of 2017 was up 7 points from a year earlier at 746. The share of borrowers with a score below 640 was just 2%, far below the peak 25% of 2001.
The average DTI of borrowers was unchanged from a year earlier at 36 while LTV was 84.9%, down 2 percentage points from a year earlier.
“Looking forward to 2018, with continuing economic and home price growth, we expect credit-risk metrics to rise modestly,” said Dr Nothaft.
