Stricter mortgage underwriting standards have resulted in a 2013 vintage of mortgages that is the best performing book of loans in the last 10 years, according to CoreLogic’s November The MarketPulse.
Mortgage performance has improved as credit has tightened in the last few years, with serious delinquency rates dropping in July 2013 to 5.4% compared to a peak of 8.5% in January 2010.
“Through the first six months of 2013, the serious delinquency rate of loans originated in 2013 is a tiny six basis points, down from 10 basis points for loans originated in 2012 and down from 108 basis points for loans originated in 2007, the worst performing year in the 2000s,” CoreLogic finds. “Not only is 2013 a clear improvement from the worst years, it is also shaping up to be the best performing year in a decade.”
Serious delinquency rates in 2003 at 15 basis points were more than twice as high as those logged for the first half of 2013, and were also higher than the average 13 basis point delinquency rate from combining 2011 and 2012 vintage years.
This indicates that the most recent mortgage vintages are “pristine” even when compared to what were considered “good performing” years in the early 2000s, notes CoreLogic.
“While there has been much consternation about underwriting being too tight in the context of forthcoming mortgage regulations, one underappreciated outcome has been the very good performance of mortgages during the last few years,” says The MarketPulse. “Tighter credit results in flawless performance.”
Access the November issue of The MarketPulse.
Written by Alyssa Gerace