NY Fed: Mortgage Originations by Credit Score, Delinquencies Increase, Foreclosures Remain Low

The NY Fed released the Q3 Quarterly Report on Household Debt and Credit this morning. Here are three charts from the report.

The first graph shows mortgage originations by credit score (this includes both purchase and refinance). Look at the difference in credit scores in the recent period compared to the during the bubble years (2003 through 2006). Recently there have been almost no originations for borrowers with credit scores below 620, and few below 660. A significant majority of recent originations have been to borrowers with credit score above 760.

Solid underwriting is a key reason I’ve argued Don't Compare the Current Housing Boom to the Bubble and Bust, Look instead at the 1978 to 1982 period for lessons

From the NY Fed:

Mortgage originations, measured as appearances of new mortgages on consumer credit reports and including both refinance and purchase originations, increased slightly from the pace of newly opened mortgages observed in the previous four quarters, with $448 billion of newly originated in 2024Q3. … Limits on home equity lines of credit (HELOC) increased by $9 billion, the tenth consecutive quarterly increase.

Credit quality of newly originated loans edged up slightly, with some improvements in the credit scores of newly originating auto loan and mortgage borrowers. Two-thirds of newly originated mortgages went to borrowers with credit scores above 760, while the share of auto loans opened by the highest credit score group borrowers hovered just below the long-term high, at 37%.

Transition Rates for Current Mortgages

A possible concern is the increase in transition rates from current to 30-60 days late. This has been steadily increasing since mortgage rates increased and is now back to pre-pandemic levels.

Further increases would be a little worrisome.

Note: I fixed the x-axis (incorrect in report).

Foreclosures Remain Low

Although the transition rate to delinquency is increasing, foreclosures remain historically low and well below pre-pandemic levels.

There is much more in the report.