econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 16 August 2015

Releveraging The Consumer Credit Panel With Two New Charts

by Liberty Street Economics

-- this post authored by Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw

Our Consumer Credit Panel, which is based on data from the Equifax credit reporting agency, first arrived at the New York Fed in 2009, and our very first Quarterly Report on Household Debt and Credit was published in August 2010, five years ago this month. We've continued to produce the same report, with very few changes, since the report's initial release. However, with this week's release of the report for the second quarter of 2015, we are beginning to make some changes, starting with two new charts that provide granularity on mortgage loan originations.

These data are identical to the originations data that we've released previously, but we now report origination volume by credit score groups. The new charts' form will be familiar to those who have seen our earlier work on auto loans or the U.S. Economy in a Snapshot, and will leverage some of the detail that we have in our dataset on new extensions of credit and underwriting standards.

Our first new chart, showing the breakout of mortgage originations by credit score, appears below. What is most striking is the post-2006 trend toward lower mortgage origination volume. Overall mortgage lending fell sharply during the financial crisis and, aside from a brief refinancing boom in 2012-13, has not recovered to pre-crisis levels. For example, new originations were $1.3 trillion in 2014, compared with $2.9 trillion in 2005.

Mortgage Originations by Credit Score

Overall, originations picked up in the second quarter of 2015 and have been rising over the last year. However, as the chart makes clear, this new mortgage borrowing has been driven by borrowers with credit scores above 660. Originations by borrowers with credit scores below 660, shown in dark blue and yellow, fell sharply after the Great Recession and have not recovered. Originations to borrowers with these low scores exceeded $650 billion in 2006, but have remained below $150 billion since 2010 as subprime mortgage lending has all but dried up.

The second chart we are adding shows the distribution of credit scores of newly originated first-lien mortgage loans.

Credit Score at Mortgage Origination

Underwriting standards for mortgages have loosened only slightly in the years since the Great Recession. The median credit score at origination hovered around 720 between 1999 and 2007 (with an average of 719); the median credit score of mortgage originators during and after the Great Recession has been 765. The 10th percentile line, in grey in the chart above, shows that the subprime borrowers have been all but precluded from originating. Between 1999 and 2007, 90 percent of borrowers who originated mortgages had credit scores above 590; between 2008 and 2015, 90 percent of borrowers had credit scores above 645, representing a 55-point upward shift of the distribution.

These charts will now be part of our Quarterly Report on Household Debt and Credit; the underlying data will be made available in our spreadsheetand the data from 1999 to 2003 will also be posted in our historical file. Stay tuned for additional changes to our report in coming quarters!

Disclaimer

The views expressed in this post are those of the author and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author.

Source

http://libertystreeteconomics.newyorkfed.org/2015/08/just-released-releveraging-the-consumer-credit-panel-with-two-newcharts.html#.Vc5XqbJViWU


About the Authors

Haughwout_andrewAndrew Haughwout is a senior vice president in the Federal Reserve Bank of New York's Research and Statistics Group.

Lee_donghoonDonghoon Lee is a research officer in the Bank's Research and Statistics Group.

Scally_joelleJoelle Scally is the administrator of the Center for Microeconomic Data in the Bank's Research and Statistics Group.

Vanderklaauw_wilbertWilbert van der Klaauw is a senior vice president in the Bank's Research and Statistics Group.

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



You can also comment using Facebook directly using he comment block below.





Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Big Mess in Italy
Are You Feeling the Economic Surge?
News Blog
October 2016 Manufacturing New Orders Improved
3Q2016 (Final): Headline Productivity Improves
October 2016 Trade Data Mixed
October 2016 CoreLogic Home Prices Year-over-Year Growth Rate Now Improved to 6.7%.
Taiwan, Trump And A Telephone: How A Simple Act Called Out A Contradiction In U.S. Diplomacy
Infographic Of The Day: A Beginner's Guide To Encryption
Early Headlines: Asia Stocks Up, Oil Down, GOP Healthcare, Trump Not Reagan Redux, EU Ending?, UK Lost Decade, Putin Taking Over Mid-East, Yuan 'Flash' Crash And More
December 5, 2016 Weather and Climate Report - December Update - Zonal Prevails
Irish Births And Baptisms Visualised
What Happens In The Smartphone Afterlife
Water Intoxication: Are We Drowning In Advice To Drink More Fluids?
The Worldwide Virtual Reality Market Is Set To Be Huge
Average Gasoline Prices for Week Ending 05 December 2016 Rose Over 5 Cents
Investing Blog
Momentum Issues A Warning
The Great Bond Crash Of 2016: 05 December Update
Opinion Blog
The Shale-War Is Over
Fake Science
Precious Metals Blog
Silver Prices Rebounded Today: Where They Are Headed
Live Markets
06Dec2016 Pre-Market Commentary: Wall Street Opens Higher, Crude Prices Fall Sharply, US Dollar Remains Soft, Gold Not Going Anywhere, Investors Waiting For Possible Correction
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government



Crowdfunding ....






























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved