Loan Demand Surges 75% Ahead of Last Year

Mortgage activity is soaring, with total mortgage origination balances reaching $466 billion in the first quarter — nearly a 75 percent increase from the same time a year ago, according to Equifax National Consumer Credit Trends Report.

The bulk of the growth has been to first mortgages, which zoomed nearly 80 percent compared to the first quarter of 2014 to $430 billion. The number of first mortgages originated in the first three months of the year was 1.78 million — a 55 percent increase over the same time a year ago and 14 percent higher than in the fourth quarter of 2014.

“The drop in mortgage rates that began in the fourth quarter of last year kicked off a refinance boomlet that accelerated in the first quarter, as rates fell further, averaging just 3.7 percent for the first three months of this year,” says Amy Crews Cutt, chief economist at Equifax. “While rates have recently reversed that trend and are back up to about 4 percent, they remain extremely low historically. These rates, coupled with a housing market that is showing signs of vigor, should carry the mortgage business over the summer.”

However, lending conditions still remain tight, Equifax’s data shows. About 4.5 percent of new first mortgage accounts were issued to consumers with credit scores below 620 — a score most often used to describe subprime credit. As comparison, in the first quarter of 2008, more than 10 percent of first mortgages were granted to subprime-credit borrowers.

Originations on home equity lines of credit also jumped last quarter, rising 30 percent to $30.9 billion, Equifax’s analysis showed.

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