Although this year’s home lending activity has been up, residential assets on the industry’s collective balance sheet have not.
For the first nine months of this year, total mortgage originations by all U.S. home lenders worked out to $1.2 trillion.
On just first-mortgage transactions, loan production shot up 63 percent from the same nine-month period a year earlier.
The numbers were among many presented in the Equifax National Consumer Credit Trends Report.
Equifax says its report provides population-level debt and lending insights and data from more than 210 million consumers.
Home-equity loan originations moved up by a fifth on a year-over-year basis, according to the credit behemoth
Equifax
noted that the volume of home-equity line-of-credit production was up 23 percent to a seven-year high.
But, despite the growth in originations, Atlanta-based Equifax explained that total residential assets outstanding were $8.84 trillion as of Sept. 30,
“nearly identical to figures from the past eighteen months.”
Equifax Chief Economist Amy Crews Cutts cited tax policy
changes, rate fluctuations and changes to mortgage regulations among reasons for the growth disparity between originations and portfolios.
On just first mortgages, outstandings peaked at $9.16 trillion in October 2008. Then, first mortgage investments bottomed out at $7.82 trillion in June 2013.
Balances since early 2014 have ranged between $8.08 trillion and $8.20 trillion.
In addition, a more thrifty borrower class is paying down debt more quickly. In the improving economy, borrowers are doing “cash-in” refinances that reduce their balance rather than withdrawing equity as is the case with a cashout refinance.
They are also making larger payments than are required, paying down debt more quickly.
Another factor is that assets are being converted to real estate owned and reducing overall outstanding residential assets.
Equifax reported a first-mortgage severe-derogatory rate of 4.5 basis points as of September 2015, tumbling from 6.7 BPS a year earlier.
“Severe derogatories are now at the lowest level since August 2007 as a share of both outstanding loans and balances,” the report stated.
Home purchases suffered last year due to
changes in federal tax policy which removed the exemption on short-sale debt forgiveness, Equifax said.
But sales have recovered this year, though “they are barely covering principal repayments rather than driving mortgage debt higher.”
Cutts noted that outstanding mortgage assets are the only credit asset type not to expand with the U.S. economy.
