Mortgage originations rose to $466 billion in the second quarter, a 27 percent leap from the previous quarter and the fourth consecutive increase after reaching a 14-year low one year ago. according to a new report from the New York Federal Reserve.
Half of the loans originated in the second quarter nearly half, $232 billion, went to borrowers with credit scores above 780, considered an excellent score. Moreover, some 92 percent of new loans made during the quarter went to borrowers with “good” or better scores. Only 8 percent, or $37.9 billion, of all new mortgages were originated to borrowers with credit scores below 660.
The New York Fed used the Equifax Risk Score 3.0 rather than FICO or Vantage to score borrowers because the ERS model predicts the likelihood of a consumer becoming seriously delinquent (90+ days past due or worse) within 24 months of scoring. The ERS range is 280 to 850, almost comparable to FICO’s scale of 300 to 850. An ERS score of 590 has an even chance of serious delinquency in 90 days. U.S. average FICO® Score is between 690 and 700.
The extraordinarily high share or excellent or better scores suggests that underwriting standards remained tight for mortgages in the, even as mortgage originations increased overall.
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