2016 was a great year for the mortgage business with $2.1 trillion in first lien mortgage originations, according to Black Knight Financial Services. The mortgage volume in 2016 represented a 17% increase over 2015 and also a 22% rise in refinance lending, while purchase originations rose 13%.
Purchase loans were at its highest level in 9 years (2006) at $1.1 trillion, but fell short by 28% from 2005’s peak volume.
Refinance originations were at approximately $300 billion for Q4 2016, which equated to a 58% increase over the same time last year.
Black Knight said that 4% of current active home loans were 120+ days delinquent or in foreclosure at some point in the past and nearly 60% of reperforming loans (RPLs) have been reperforming for 24 months or more, as compared to compared to 54% one year ago and 34% at the end of 2012.
Nearly one million loan modifications were made in 2010 with approximately half of these via proprietary loan modifications, and 30% being HAMP modifications and other forms of cures representing the remaining 23%.
The data also showed re-default rates within the RPL market as a whole have improved over time as the market has become more seasoned, but significant variations in performance exist depending on how long the loan had been reperforming, how the loan was brought current, and how many prior modifications there had been on the loan among other factors, according to Black Knight.
Finally, RPLs are also much less likely to prepay than non-RPL mortgages, while loans that became reperforming through modification are much less likely to prepay than non-modified RPLs.
Black Knight Data & Analytics Executive Vice President Ben Graboske had said:
“A strong fourth quarter finish to the year pushed total 2016 origination volumes to the highest level seen in nine years. We’ve now seen nine consecutive quarters of double-digit purchase origination growth, and growth overall in the purchase market in 21 of the past 22 quarters.”
Graboske further stated, “The refinance market topped $1 trillion in 2016 as well, driven by a year of historically low rates. In fact, in the last quarter of 2016, refinance origination volumes were up 58 percent over 2015 and were the highest of any quarter since Q2 2013.
However, as Black Knight reported in our First Look at January’s mortgage performance data, prepayment speeds – historically a good indicator of refinance activity – fell by 30 percent from December to January. When you couple this with the fact that there are 5.7 million, or nearly 70 percent, fewer refinance candidates in the market entering Q1 2017 than there were entering Q4 2016, it becomes very likely that we will see these numbers decline significantly in the first quarter.”