Mortgage was the only category in the quarter to increase risk-taking
Mortgage originations declined in the fourth quarter on both quarter-over-quarter and year-over-year bases as risk-taking for the category also increased on both bases, according to the fourth-quarter update to its Default Risk Index released by VantageScore Solutions.
VantageScore is the developer of the VantageScore credit scoring models.
Mortgage originations totaled $402.16 billion during the fourth quarter, a decline of 5.2% from the previous quarter and down 17.5% from the same quarter in 2016.
Meanwhile, the default risk index for mortgages, which compares the total volume and weighted-average risk profile of quarterly originations, showed slight and steady increases over time.
VantageScore calculated a 1.12% weighted probability of default for fourth-quarter mortgage originations and a default risk index of 96.6. The index climbed 3.7% from its third-quarter level and surged 13% from its year-ago level.
VantageScore said that the default risk index of mortgage loans remains only marginally below 2013 levels. Additionally, mortgage was the only category in the quarter to increase risk-taking both sequentially and year-over-year.
Each risk profile is indexed to the beginning of the series, where the third quarter of 2013 equals 100. Default risk index profiles that are close to 100 show an equivalent risk activity to the 2013 benchmark.
