Smart Borrower Blog

Mortgage Originations Tumble to 5-Year Lows


May 15th, 2019 @ 11:58 AM by Amber Nelson


Even though mortgage interest rates have remained near record lows, total new mortgage originations fell to a 5-year low during the first quarter of 2019, according to data from the Federal Reserve Bank of New York.

Total originations dropped $60 billion from the previous quarter to $344 billion, the lowest level since the third quarter of 2014. Mortgage originations have now declined for two straight quarters.

Mortgage debt on the whole has reached $9.2 trillion, up $120 billion in the first quarter.

Fewer Americans are taking on mortgages in general. The New York Fed reported that as of the fourth quarter of 2018, just 26% of the population had a mortgage, a 20-year low and down from the 2006 peak of 34%.

There were fewer home equity loans in the first quarter as well, with the total amounting to $406 billion, down $6 billion from one quarter earlier. HELOC balances have made a steady decline since 2009.

The New York Fed attributes the falling mortgage numbers to stricter mortgage loan standards. Average credit scores of borrowers have been rising, with the first quarter average at 759. Only 10% of all borrowers had a score below 647, considered subprime. The vast majority of mortgage borrowers had credit scores of 700 or higher. The underwriting standards have firmed in recent years as lenders have tried to decrease their exposure to risk.

If fewer Americans are entering into mortgages, those who do have mortgages are largely being more responsible with repayment. Just 1% of total mortgage balances were delinquent by 90 days or more in the 2019 first quarter, a 1.1% decrease from the 2018 fourth quarter. And only 0.9% of all loan balances transitioned to from current to delinquent in the first quarter.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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