The weighted average loan age has reached its highest on record at 54 months.
And while the average loan age differs significantly by credit score bucket, in general the average loan age has been rising steadily for the past nine years, according to the analytics division of Black Knight Financial Services’ (BKFS) latest Mortgage Monitor Report, based on data as of the end of August 2014.
New originations impacted loan age in 2013, says Kostya Gradushy, Black Knight’s manager of research and analytics, in a written statement.
“The high volume of originations in 2013 resulted in a temporary slowdown,” Gradushy says. “However, the average loan age since then has hit its highest level ever at 54 months. Reviewing the data at a more granular level, we see that the age of loans with credit scores of 750 and above has remained relatively constant for the last five years. However, lower credit score loans – particularly those with scores below 700 – have seen dramatic increases in average age.”
Through evaluating mortgage performance Black Knight found delinquencies in 2012-2014 vintage loans lower than any of the prior seven years.
“In fact, even among borrowers with lower credit scores, these vintages are outperforming all previous vintages,” Gradushy says. “This holds true for FHA mortgages as well, where we found that early-stage delinquencies were lower than in all pre-2012 vintages.”
In addition, nearly half (49%) of loans that had been in foreclosure at the end of 2013 remained in that status as of August 2014. Further, 25% of these loans had been modified at some point in the last eight months before falling back into foreclosure.
Looking more widely at modifications completed on loans in foreclosure over the past four years, Black Knight found the three-month re-default rate on 2014 modifications to be the highest since 2011.
This held true only for modifications on loans in foreclosure, though, Black Knight says, adding that re-default rates on modifications of loans in delinquent statuses of both 90 days and 120 days or more past due actually saw re-default rates decline again in 2014, as they have for the last four years.
The report also finds that the total U.S. loan delinquency rate was 5.90% and the month-over month change in delinquency rate was 4.68%.
Access the full report here.
Written by Cassandra Dowell