Housing Credit Index

Transcription

1 Housing Credit Index FOURTH QUARTER 2016

2 CoreLogic HCI National Overview The CoreLogic HCI is a robust credit index that measures mortgage credit risk using the following information: Purchase-money and refinance mortgage loans dating back 15 years, allowing us to track, pre- and post- economic crisis activity Additional Observations 737: the average credit score on purchase money loans in Q : average loan-tovalue ratio, up from 86.7% for the same period last year. 36.0: average debtto-income, equal to the same period last year. Data from all 50 states and the District of Columbia, allowing comparisons across the U.S. All loan products in both the prime and subprime lending segments are included The HCI methodology (principal component analysis) is designed to reduce a complex set of variables to an easier-to-interpret dimension 4th Quarter Highlights New Loan Risk : Lowest 1% The Housing Credit Index stood at 44 in the Q The index is down yearover-year and down from a level of 100 in The credit score for the lowest 1% of the home-purchase borrowers has increased to 628 from a range of 490 to 510 in % 26% Loan-to-Value: 95% or Above Debt-To-Income: 43% or Above The share of home purchase loans with loan-to-value at, or above 95% was 48%, up from 47% year-over-year and up from 36% in % of the home-purchase loans had a debt-to-income share of 43% or higher, up from 25% one year earlier and 24% in Source: CoreLogic 2

3 Housing Credit Index (2001=100) More Risk HCI FACTORS 100 Loan-toValue Ratio (LTV) Debt-to-Income Ratio (DTI) Documentation Type Occupancy Status Condo/Co-op Share 2001:Q4 2003:Q1 2004:Q2 2005:Q3 2006:Q4 2008:Q1 2009:Q2 2010:Q3 2011:Q4 2013:Q1 2014:Q2 2015:Q3 2016:Q Benchmark Less Risk Sources: CoreLogic Loan Servicing Database The graph above shows the overall Housing Credit Index from the first quarter of 2001 through the end of the fourth quarter of The index has been set equal to 100 for the year The higher the number, the higher the level of credit risk in the new loan market. The lower the number, the less risk present. Mortgage loans closed during the final three months of 2016 had characteristics that contribute to relatively low levels of default risk. While our Index indicates somewhat less risk than a quarter and a year earlier, this partly reflects the large refinance share of fourth quarter originations. Refinance borrowers typically have a lower LTV and DTI than purchase borrowers. Dr. Frank Nothaft, chief economist for CoreLogic 2017 CoreLogic Proprietary. This material may not be reproduced in any form without express written permission. FOURTH QUARTER

4 HCI Purchase-Money Credit Risk Benchmark (2001 and 2002 Originations) Less Than 640 Current (2016:Q4) Low & No Doc Share 100 LTV Share 95 And Above Mortgage loans closed 0 during the final three months of 2016 had characteristics that contribute to relatively DTI Share 43 And Above low levels of default risk. Condo Coop Share Non-Owner Occupancy Share Sources: CoreLogic Loan Servicing Database The chart above represents the six elements used to calculate the housing credit index. The gray hexagon represents a normal housing market, as set by market conditions in 2001 and The gold shape is the market as it currently stands. In Q4 2016, the high LTV and non-owner occupant shares are higher while low- and no-doc share and low credit score share are down significantly compared to our benchmark. The high DTI and condo/co-op shares are similar. 4

5 CoreLogic HCI Highlights Average by State as of Q Average Source: CoreLogic Top 4 States and District of Columbia by for Purchase-Money Loan Borrowers DISTRICT OF COLUMBIA CALIFORNIA NEW YORK NEW JERSEY HAWAII Bottom 5 States by for Purchase-Money Loan Borrowers MISSISSIPPI INDIANA KANSAS NORTH DAKOTA GEORGIA CoreLogic Proprietary. This material may not be reproduced in any form without express written permission. FOURTH QUARTER

6 for 1st Percentile of Borrowers Increased Sharply After th Percentile Average 1st Percentile Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Sources: CoreLogic Loan Servicing Database The chart above displays the average credit score for purchase-money borrowers by percentile. The 1st percentile were the traditional subprime borrowers, the 99th percentile would be considered super-prime. The 1st percentile average score has increased more than 100 points since the benchmark period of of 1st percentile borrowers in Q Average Score of all borrowers in Q Average Score of 99th percentile borrowers in Q Source: CoreLogic 6

7 CoreLogic HCI Loan-to-Value Highlights Five States with the Highest Loan-to-Value NORTH DAKOTA ALASKA MISSISSIPPI NEBRASKA OKLAHOMA Four States and the District of Columbia with the Lowest Loan-to-Value DISTRICT OF CALIFORNIA NEW YORK COLUMBIA NEW JERSEY OREGON LTV :Q4 2016:Q3 2016:Q4 Refinance volume will decline with higher mortgage rates, and lenders generally will respond by applying the flexibility in underwriting guidelines to make loans to harder-to-qualify borrowers. As this occurs, we should observe our Index signaling a gradual increase in default risk. The evolution to a more purchasedominated lending mix is also likely to increase fraud risk. ths and years. Frank Nothaft, chief economist at CoreLogic 87.1% Average loan-to-value ratio of all purchase-money loans in Q4 2016, up from 86.7% a year ago. Sources: CoreLogic 2017 CoreLogic Proprietary. This material may not be reproduced in any form without express written permission. FOURTH QUARTER

8 Applications versus Originations % 0.8% Originations Applications 0.6% 0.4% Applications in the lower credit score range are 0.2% almost non-existent in 2016 when compared to Applicants may be self-removing themselves from the applicant pool. This may explain some of 0.0% Source: CoreLogic the decline in new-loan credit risk % 1.0% Originations Applications 0.8% 0.6% 0.4% 0.2% 0.0% Source: CoreLogic 8

9 Methodology The CoreLogic Housing Credit Index (HCI) measures the variation in mortgage credit risk attributes and uses loan attributes from mortgage loan servicing data that are combined in a principal component analysis (PCA) model. PCA can be used to reduce a complex data set (e.g., mortgage loan characteristics) to a lower dimension to reveal properties that underlie the data set. The HCI combines six mortgage credit risk attributes, including borrower credit score, loan-to-value (LTV) ratio, debt-to-income (DTI) ratio, documentation level (full documentation of a borrower s economic conditions or incomplete levels of documentation, including no documentation), occupancy (owner-occupied primary residence, second home, or non-owner-occupied investment), and property type (whether property is a condominium or co-op). It spans more than 15 years, covers all loan products in both the prime and subprime lending segments and includes all 50 states and the District of Columbia, permitting peak-to-peak and trough-to-trough business cycle comparisons across the U.S. The CoreLogic prime and subprime servicing data include loan-level information, both current and historical, from servicers on active first-lien mortgages in the U.S. In addition, Inside Mortgage Finance (IMF) survey data and CoreLogic public records data for the origination share by loan type (conventional, government, jumbo, subprime) were used to adjust the servicing data to assure that it reflects primary market shares. These changes across different dimensions are reflected in the HCI. A rising HCI indicates increasing credit risk and a declining HCI indicates decreasing credit risk. SOURCE: CORELOGIC The data provided are for use only by the primary recipient or the primary recipient s publication or broadcast. These data may not be re-sold, republished or licensed to any other source, including publications and sources owned by the primary recipient s parent company without prior written permission from CoreLogic. Any CoreLogic data used for publication or broadcast, in whole or in part, must be sourced as coming from CoreLogic, a data and analytics company. For use with broadcast or web content, the citation must directly accompany first reference of the data. If the data are illustrated with maps, charts, graphs or other visual elements, the CoreLogic logo must be included on screen or web site. For questions, analysis or interpretation of the data contact Lori Guyton at lguyton@cvic.com or Bill Campbell at bill@campbelllewis.com. Data provided may not be modified without the prior written permission of CoreLogic. Do not use the data in any unlawful manner. These data are compiled from public records, contributory databases and proprietary analytics, and its accuracy depends upon these sources. ABOUT CORELOGIC CoreLogic (NYSE: CLGX) is a leading global property information, analytics and data-enabled solutions provider. The company s combined data from public, contributory and proprietary sources includes over 4.5 billion records spanning more than 50 years, providing detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related performance information. The markets CoreLogic serves include real estate and mortgage finance, insurance, capital markets, and the public sector. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and managed services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and mitigate risk. Headquartered in Irvine, Calif., CoreLogic operates in North America, Western Europe and Asia Pacific. For more information, please visit CORELOGIC and the CoreLogic logo are trademarks of CoreLogic, Inc. and/or its subsidiaries. All other trademarks are the property of their respective owners. CONTACT For more information, please alaustin@corelogic.com CoreLogic Proprietary. This material may not be reproduced in any form without express written permission. FOURTH QUARTER

10 For an expanded perspective on housing economies and property markets, visit corelogic.com/insights and follow us on: CoreLogic Insights On The Go. Download our free App now: CoreLogic CoreLogic Econ corelogic.com 2017 CoreLogic, Inc. All rights reserved. CORELOGIC and the CoreLogic logo, are trademarks of CoreLogic, Inc. and/or its subsidiaries. All other trademarks are the property of their respective holders. 17-HCIQ