TheMReport — News and strategies for the evolving mortgage marketplace.
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40 | Th e M Rep o RT Department SERVICING Mortgage Balances Rise in 2014 The uptick in mortgage balances was helped by the rising popularity of jumbo loans in the low interest rate environment. A verage mortgage balances ticked up over 2014, continuing a trend of yearly growth since the housing recovery kicked off in 2012. According to a report released in February by credit reporting firm TransUnion, the average mortgage balance per consumer increased to $187,139 by the end of last year's fourth quarter, up from $185,496 in Q 4 2013. "Much of this gain can be attributed to those consumers who took advantage of a low interest rate environment to purchase homes with jumbo mortgage loans," said Ezra Becker, VP of research and consulting in TransUnion's financial services business unit. Going by a lagging indicator, the share of jumbo mortgages as a portion of all origina- tions increased by 8 percent in the third quarter of last year compared to 6.8 percent a year prior and 5.8 percent in Q 3 2012. The findings echo what the Mortgage Bankers Association (MBA) reported for much of the last year. Though mortgage application activity has been weak overall among American consumers, MBA saw a steady increase in demand for jumbo loans, spurring lenders to enhance their offerings in that line. TransUnion recorded 53.2 million mortgage accounts of as the fourth quarter, up from 52.9 million a year prior but down by more than 6 million compared to the end of 2009. For the third quarter, the company reported a 7 percent quarterly increase in new account originations, though that figure was still off from year-ago numbers by 20 percent. New account data is viewed one quarter in arrears to ensure all accounts are included. The greatest increase in mortgage balances came in the super prime risk category, categorized as consumers in the highest range of credit scores. Balances in that register rose approximately 3 percent in the last year, TransUnion said. At the same time, the risk tier composi- tion of mortgage originations moved away from super prime and into lower groups. According to TransUnion, the super prime share of originations was 27.8 percent in Q 3, down from 32.1 percent in Q 3 2013. Meanwhile, the share of non-prime origina- tions climbed from 14.5 percent in Q 3 2013 to 16.7 percent in Q 3 2014.