Purchase mortgage originations are soaring because of high-credit score applicants, while refinance applications are declining among the same group of borrowers, according to Black Knight Financial Services.
Purchase mortgage originations are up about 11% early in the third quarter, compared to a year earlier, according to Black Knight's Mortgage Monitor Report. This follows a 15% year-over-year rise in second quarter purchase volume. About 20% of purchase loans originated in the past three months have gone to borrowers with sub-700 credit scores. The average credit score for purchase mortgages hit about 755, which Black Knight said is an all-time high.
Meanwhile, refi originations have declined since March. The trend signals "a degree of burnout, as those both interested and able to take advantage of currently low interest rates likely already have refinanced," Ben Graboske, senior vice president at Black Knight Data & Analytics, said in a news release.
As a result, many in the market have been misled into thinking that credit has loosened, Graboske said. Rather, applicants with high credit scores are simply burned out from repeated refinancings.
