Overall mortgage lending in this year's second quarter increased 20% from the previous quarter, but total volumes were down 16% from the second quarter of 2016, according to Black Knight Financial Services.

A total of about $467 billion in first-lien mortgages were originated in the second quarter, including both purchase and refinance loans.

A seasonal decline of 20%, or $37 billion, in refinances was greatly offset by a 57%, $117 billion quarterly increase in purchase lending.

Refinance loans made up 31% of all mortgage originations, the lowest this share has been since 2000. Comparatively, purchase lending is now at its highest level since 2007, though the number of purchase originations trails pre-crisis norms by almost 30%.

In the second quarter, purchase loan originations increased by 6% to $321 billion from the same period last year.

"The total dollar amount of purchase originations is higher than averages seen from 2000-2003, prior to both the peak in home prices and the Great Recession that followed. This is partly due to rising home prices, but also comes as a result of an all-but-total absence of second-lien usage for purchases, a shift toward high-dollar/low-risk loans among nonagency lenders and a higher share of cash purchases at the lower end of the market," said Ben Graboske, Black Knight's data and analytics executive vice president, in a press release.

Despite purchase originations being strong in dollar amount, the market still is not performing at peak capacity, with a key cause being stricter purchase lending credit requirements enacted in response to the financial crisis.

Borrowers with credit scores at or above 720 accounted for about 74% of second-quarter purchase loans, compared to the 47% pre-crisis average.

About 65% less purchase loans are being originated to borrowers with credit scores under 720, with the lack of credit availability to those borrowers causing a strong headwind for the purchase market, according to Graboske.

"Using 2000-2003 averages as a measure, as many as 645,000 purchase loans were not originated in Q2 due to tighter lending standards. To put it another way, the purchase market is operating at less than two-thirds of peak capacity because of these factors," Graboske said.

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