New mortgages for purchasing homes are churning out at a fast clip, with the borrowers getting those loans having some of the highest credit scores ever. Because credit is favoring a smaller segment of borrowers, the result is that loan performance is arguably the best in history.
Purchase mortgage originations in the second quarter of this year were up 15 percent from a year ago, according to Black Knight Financial Services. June, the height of the spring sales season, saw the largest purchase loan volume since 2007, due to a high volume of sales.
As cash-heavy investors move out, mortgage-dependent borrowers are moving in. Cash sales made up about 30 percent of total home sales in July, the latest reading, down from 34 percent in July 2014. It is at the lowest level in nine years.
High-credit borrowers, those with FICO scores above 700, are almost entirely behind the surge in purchase applications. Activity among borrowers with lower scores is flat to slightly lower from a year ago, according to Black Knight. In fact, just 20 percent of purchase originations over the past three months have come from borrowers with credit scores below 700, the lowest level in more than a decade. This as the average credit score for purchase mortgages hit a record high of about 755. The median credit score in the U.S. is about 720 according to FICO, and the average score is 695.
to me this news report is akin to what happens in stellar nucleosynthesis, or fusion of lighter elements into heavier ones (a star like our sun first fuses hydrogen into helium, and so on down the line till elements can fuse no-longer when things get to “lead”)
so in other words, those high up on the economic food chain have had their go by bidding up global equities and global RE, BUT it seems these investment vehicles are leveling off is price appreciation, so now it those below just below the 1% (who want to play the game) are finding out it in order to get in on the QE “credit” money scheme, requires historically ever higher creditworthiness!
I am not trying to predict when the next economic down turn will happen, but if the stellar nucleosynthesis model applies to forecasting what will happen to the economy, expect something to pop much sooner than much later and plan accordingly because ever higher creditworthiness (in order to qualify to buy RE) is another symptom telling us the global economy as it now exists is un-sustainable…
also of concern is a news report:
The former U.S. comptroller general says the real U.S. debt is closer to about $65 trillion than the oft-cited figure of $18 trillion.
Dave Walker, who headed the Government Accountability Office (GAO) under Presidents Bill Clinton and George W. Bush, said when you add up all of the nation’s unfunded liabilities, the national debt is more than three times the number generally advertised.
“If you end up adding to that $18.5 trillion the unfunded civilian and military pensions and retiree healthcare, the additional underfunding for Social Security, the additional underfunding for Medicare, various commitments and contingencies that the federal government has, the real number is about $65 trillion rather than $18 trillion, and it’s growing automatically absent reforms,”
Americans have “lost touch with reality” when it comes to spending.
