MORTGAGE MONITOR - Black Knight, Inc....2001-05 2002-05 2003-05 2004-05 2005-05 2006-05 2007-05...

APRIL 2019 REPORT

MORTGAGE MONITOR

https://www.blackknightinc.com/data-reports/?report-type=mortgage-monitor&report-year=2018https://www.blackknightinc.com/

Confidential, Proprietary and/or Trade Secret TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, and/or an affiliate. © 2019 Black Knight Financial Technology Solutions, LLC. All Rights Reserved.

MORTGAGE MONITOR

APRIL 2019 | 2Confidential, Proprietary and/or Trade Secret TM SM ® Trademark(s) of Black Knight IP Holding Company, LLC, and/or an affiliate. © 2019 Black Knight Financial Technology Solutions, LLC. All Rights Reserved.

Each month, the Black Knight Mortgage Monitor looks at a variety of issues related to the mortgage finance and housing industries.

This month, as always, we begin with a review of some of the high-level mortgage performance statistics reported in our most recent First Look report, with an update on delinquency, foreclosure and prepayment trends. We then take a deeper dive into April’s strong improvement in mortgage performance, and provide an in-depth look at prepayment activity in recent months by cause of prepay.

Then, in light of recent pullbacks in interest rates, we leverage the latest data from the Black Knight HPI to take a detailed look at home prices across the U.S., finding the trend of growth deceleration continues. We also revisit the impact these trends are having on home affordability. Finally, we review both purchase and refinance-related origination growth in Q1 2019, while breaking down refinance growth by rate/term vs. cash-out origination volumes.

In producing the Mortgage Monitor, Black Knight’s Data & Analytics division aggregates, analyzes and reports upon the most recently available data from the company’s vast mortgage and housing related data assets. Information is gathered from the McDash loan-level mortgage performance dataset, the Black Knight HPI and the company’s robust public property records database covering 99.9% of the U.S. population. For more information on gaining access to Black Knight’s data assets, please call 844-474-2537 or email [email protected].

APRIL 2019 OVERVIEW

MORTGAGE MONITOR

APRIL FIRST LOOK RELEASE

APRIL MORTGAGE PERFORMANCE DEEP DIVE

HOME PRICES & AFFORDABILITY

Q1 ORIGINATION VOLUMES

APPENDIX

DISCLOSURES

3

4

8

14

16

19

CONTENTS

https://www.blackknightinc.com/https://www.blackknightinc.com/data-reports/?report-type=mortgage-monitor&report-year=2018https://www.blackknightinc.com/https://www.blackknightinc.com/black-knights-first-look-at-April-2019-mortgage-data/https://www.blackknightinc.com/what-we-do/data-services/https://www.blackknightinc.com/what-we-do/data-services/mailto:mortgage.monitor%40bkfs.com?subject=https://twitter.com/black_knightinc?lang=enhttps://www.linkedin.com/company/blackknight/https://www.blackknightinc.com/data-reports/?report-type=mortgage-monitor&report-year=2018


MORTGAGE MONITOR

APRIL 2019 | 3

Here we have an overview of findings from Black Knight’s ‘First Look’ at April mortgage performance data. This information has been compiled from Black Knight’s McDash loan-level mortgage performance database. You may click on each chart to see its contents in high-resolution.

APRIL 2019 FIRST LOOK RELEASE

Following a slow start to the year, the national delinquency rate fell by more than 5% month-over-month; at 3.47%, it is now at its lowest level on record dating back to 2000

APRIL OVERVIEW STATS

CHANGE IN DELINQUENCY RATE

Strong April mortgage performance pushed the national delinquency rate

to a record low

The month’s decline was the strongest single-month April

improvement on record

ACTIVE FORECLOSURES

The number of loans in active foreclosure is now at its lowest

point since January 2006

As of April, 259K loans remain in active foreclosure

PREPAYMENT RATE

Low interest rates and the spring homebuying season continue to push

prepayment activity upward

April’s increase in prepays brings the three-month aggregate increase to 67%

17.5%-2.2%-5.1%

https://www.blackknightinc.com/https://www.blackknightinc.com/data-reports/?report-type=mortgage-monitor&report-year=2018https://www.blackknightinc.com/black-knights-first-look-at-april-2019-mortgage-data/https://www.blackknightinc.com/what-we-do/data-services/http://www.blackknightinc.com/wp-content/uploads/2019/05/BKI_MM_Apr2019_Chart01.pdfhttp://www.blackknightinc.com/wp-content/uploads/2019/05/BKI_MM_Apr2019_Chart01.pdfhttp://www.blackknightinc.com/wp-content/uploads/2019/05/BKI_MM_Apr2019_Chart01.pdf


MORTGAGE MONITOR

APRIL 2019 | 4

Here, we break down April’s strong improvement in mortgage performance and provide an in-depth look at prepayment activity in recent months by cause of prepay. This information has been compiled from Black Knight’s McDash loan-level mortgage performance database. You may click on each chart to see its contents in high-resolution.

APRIL 2019 APRIL MORTGAGE PERFORMANCE DEEP DIVE

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

2000

-04

2001

-04

2002

-04

2003

-04

2004

-04

2005

-04

2006

-04

2007

-04

2008

-04

2009

-04

2010

-04

2011

-04

2012

-04

2013

-04

2014

-04

2015

-04

2016

-04

2017

-04

2018

-04

2019

-04

Performance Month

NATIONAL DELINQUENCY RATE – FIRST LIEN MORTGAGESDelinquency Rate 2000-2005 Average Previous Record Low

-10.

6%

-25%

-20%

-15%

-10%

-5%

0%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

SEASONAL DELINQUENCY RATE IMPROVEMENT AT BEGINNING OF EACH YEAR

First 3 Months First 4 Months

» After seeing delinquencies decline by less than 6% over the first three months of 2019 – the lowest seasonal improvement to start any year on record – April made up for lost ground

» As mentioned, April marked a record-low for the national delinquency rate

» The national delinquency rate declined by 5% in April alone, bringing the aggregate 2019 YTD improvement to -10.6%

» April benefitted from following March’s Sunday month-end, which almost always brings underperformance for that month and over-performance in the next

» The trend held true; the month’s decline was the strongest single-month April improvement on record dating back to 2000

» After the worst 3-month start to any year on record, we’ve now pulled relatively close to the 10-year average 4-month improvement of -12.3%

SEASONAL DELINQUENCY RATE IMPROVEMENT AT BEGINNING OF EACH YEAR

NATIONAL DELINQUENCY RATE – FIRST LIEN MORTGAGES

https://www.blackknightinc.com/https://www.blackknightinc.com/data-reports/?report-type=mortgage-monitor&report-year=2018https://www.blackknightinc.com/what-we-do/data-services/http://www.blackknightinc.com/wp-content/uploads/2019/05/BKI_MM_Apr2019_Chart03.pdfhttp://www.blackknightinc.com/wp-content/uploads/2019/05/BKI_MM_Apr2019_Chart02.pdf


MORTGAGE MONITOR

APRIL 2019 | 5


0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

2007

-04

2008

-04

2009

-04

2010

-04

2011

-04

2012

-04

2013

-04

2014

-04

2015

-04

2016

-04

2017

-04

2018

-04

2019

-04

PREPAYMENT RATE (SMM) BY INVESTOR / PRODUCTGSE FHA/VA PORTFOLIO PRIVATE TOTAL MARKET

+67%

-60%

-40%

-20%

0%

+20%

+40%

+60%

+80%

2009-04

2010-04

2011-04

2012-04

2013-04

2014-04

2015-04

2016-04

2017-04

2018-04

2019-04

3-MONTH CHANGE IN PREPAYMENT RATE (SMM)

» April marks the third consecutive month of rising prepayment activity due to a combination of declining interest rates and a seasonal rise in home sales

» Prepayment activity is now up 67% over the past 3 months, the largest such increase in more than 10 years

» Nearly half of the larger-than-average increase in FHA/VA prepays (+89% 3-month aggregate) is due to home sales rather than refinance activity

» Single month mortality (SMM) ranged from 0.92% to 1.08%, the smallest such delta (16BPS) between investor classes in nearly 2.5 years

» Despite the recent increase, the total market prepayment rate of 0.99% is still below the 5-year average of 1.04%

3-MONTH CHANGE IN PREPAYMENT RATE (SMM) PREPAYMENT RATE (SMM) BY INVESTOR / PRODUCT

https://www.blackknightinc.com/https://www.blackknightinc.com/data-reports/?report-type=mortgage-monitor&report-year=2018http://www.blackknightinc.com/wp-content/uploads/2019/05/BKI_MM_Apr2019_Chart05.pdfhttp://www.blackknightinc.com/wp-content/uploads/2019/05/BKI_MM_Apr2019_Chart04.pdf


MORTGAGE MONITOR

APRIL 2019 | 6


Rate/Term Refi(+180%,+15bps)

39%Cash-out Refi(+33%,+5bps)

12%

Sale of Home (+76%,+18bps)

45%

Curtailment(+17%,+1bps)

4%

BREAKDOWN OF 3-MONTH RISE IN PREPAY (SMM) ACTIVITYRate/Term Refi Cash-out Refi Sale of Home Curtailment Default

14 17 17 17 21 18 25 21 18 16 12 11 9 9 7 7 8 6 7 5 6 9

15 17 24

21 24 24 23

28 25

30 28 26 24

21 23 21 21 19 19 20 17 19 15 16 15 16

19 20

39

51 56 49 51

40

41 36

35 26

26 38 42

50 55 51 50

36 39

34 32 23 24

35

41

7

8 8

7 7

8

10

8 9

8 8

10 8 8 9 8 11

8 9

8 8 8

8

9

10 6

6 6

5

6

5

6

5 5

4 4

5 5 5 6 4 5

4 4

3 4 3

3

4

3

-

20

40

60

80

100

120

140

2017

04

2017

05

2017

06

2017

07

2017

08

2017

09

2017

10

2017

11

2017

12

2018

01

2018

02

2018

03

2018

04

2018

05

2018

06

2018

07

2018

08

2018

09

2018

10

2018

11

2018

12

2019

01

2019

02

2019

03

2019

04

Prep

aym

ent R

ate

(SM

M) i

n BP

S

PREPAY ACTIVITY (SMM) BY CAUSE OF PREPAYMENT(24-MONTH DETAILED BREAKDOWN)

Rate/Term Refi Cash-out Refi Sale of Home Curtailment Default

» Rate/Term refinance-driven prepays are up 180% (+15BPS) over the past three months and are now nearly 5X higher than when interest rates peaked in November 2018

» The estimated 24BPS of SMM made up by Rate/Term refis in April is the highest such total since October 2017

» Cash-out refis are up 33% over the past 3 months (+5BPS), with a similar rise from October

» The most dominant factor in rising prepayment speeds over the past three months has been the seasonal increase in home sales, accounting for 45% of the total rise

» Curtailment activity has risen seasonally as well, but has accounted for less than 4% of the total rise in prepays

BREAKDOWN OF 3-MONTH RISE IN PREPAY (SMM) ACTIVITYPREPAY ACTIVITY (SMM) BY CAUSE OF PREPAYMENT(24-MONTH DETAILED BREAKDOWN)



MORTGAGE MONITOR

APRIL 2019 | 7


953,000

$162

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000


MORTGAGE MONITOR

APRIL 2019 | 8

Here, we take an in-depth look at home price trends in light of recent pullbacks in interest rates, and how they have impacted home affordability. This information has been compiled from Black Knight’s Home Price index and the company’s McDash loan-level mortgage performance database. You may click on each chart to see its contents in high-resolution.

APRIL 2019 HOME PRICES & AFFORDABILITY

+1.0

%

+3.8%

-0.50%

0.00%

0.50%

1.00%

1.50%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Jan

Mar

May Ju

l

Sep

Nov Jan

Mar

May Ju

l

Sep

Nov Jan

Mar

May Ju

l

Sep

Nov Jan

Mar

May Ju

l

Sep

Nov Jan

Mar

May Ju

l

Sep

Nov Jan

Mar

May Ju

l

Sep

Nov Jan

Mar

2013 2014 2015 2016 2017 2018 2019

BLACK KNIGHT HOME PRICE INDEX1-Month Change (right axis) Annual Rate of Home Price Appreciation (left axis)

Mar 19:+3.8%

Feb 18:4.33%

Nov-18: 4.87%

May-194.06%

3.0%

3.5%

4.0%

4.5%

5.0%

2%

4%

6%

8%

10%

2012

-11

2013

-02

2013

-05

2013

-08

2013

-11

2014

-02

2014

-05

2014

-08

2014

-11

2015

-02

2015

-05

2015

-08

2015

-11

2016

-02

2016

-05

2016

-08

2016

-11

2017

-02

2017

-05

2017

-08

2017

-11

2018

-02

2018

-05

2018

-08

2018

-11

2019

-02

2019

-05

Fred

die

30-Y

ear F

ixed

Inte

rest

Rat

e

Annu

al R

ate

of H

ome

Pric

e Ap

prec

iatio

n

HOME PRICE APPRECIATION VS 30-YR FIXED INTEREST RATEAnnual Rate of Home Price Appreciation (Left Axis) 30-Year Fixed Interest Rate

» In March – a month that typically sees the largest home price gains of the year – prices rose by just 1%, marking 13 consecutive months of home price deceleration

» The annual rate of appreciation has now slipped to 3.8%, the first time annual home price growth has fallen below its 25-year average of 3.9% since 2012

» Home prices began to decelerate in February 2018 as rising interest rates put pressure on affordability, intensifying toward the end of the year as 30-year fixed rates peaked near 5% in November

» Rates have since declined, and are now hovering close to 4%; however, they didn’t fall below 4.25% until the last week of March, meaning we likely won’t see the impact – if any – on home prices until May or June housing numbers are available

HOME PRICE APPRECIATION VS 30-YR FIXED INTEREST RATE BLACK KNIGHT HOME PRICE INDEX



MORTGAGE MONITOR

APRIL 2019 | 9


Geography (CBSA) 12-Month Change in AnnualHome Price Growth

Annual Home Price Growth(March 2019)


San Jose, CASeattle, WASan Francisco, CALos Angeles, CALas Vegas, NVSan Diego, CADenver, COStockton, CARiverside, CABaton Rouge, LA

-30%-13%-12%-7%-7%-7%-6%-6%-6%-6%

-6%+1%+0%+1%+9%+1%+3%+5%+3%+0%

+24%+14%+12%+9%

+15%+8%+9%+11%+9%+6%

Riverside, CA: -6.0%

Seattle, WA: -13.3%

San Jose, CA: -30.0%San Francisco, CA: -12.4%

San Diego, CA: -6.8%Los Angeles, CA: -7.2%

Las Vegas, NV: -6.8%

Denver, CO: -6.3%

Baton Rouge, LA: -5.8%

12-MONTH CHANGE IN ANNUAL HOME PRICE GROWTH RATEBLUE = DECREASING | GREEN = INCREASING

12-MONTH CHANGE IN ANNUAL HOME PRICE GROWTH RATEBLUE = DECREASING | GREEN = INCREASING

» Slowing continues to be strongest in the western U.S., with the most acute deceleration along the western coast of California and in Seattle, WA

» California's rate of appreciation has slowed by 8% (an 84% reduction), from 9.6% one year ago to just 1.6% as of March

» San Jose, Seattle and San Francisco have all seen annual home price growth rates declining by more than 10 percentage points (-30%, -13%, and -12%) respectively.

» Of these 85 markets, 65 exhibited greater deceleration at the low end of the market than the high end, providing some good news for entry level buyers

» However, prices continue to grow faster at the low end, with growth at the low end outpacing that of the high end in 84 of those 85 markets

» On average, the annual rate of appreciation among Tier 1 properties (those in the bottom 20% by price) in the 100 largest markets is 5.8%, as compared to 2.2% of Tier 5 properties

» The 3.6% delta between the two is actually down from 4.9% a year ago, with the low end of the market cooling at a somewhat sharper rate than the high end

Of the 100 largest U.S. housing markets, 85 have seen their growth rate decrease over the past 12 months



MORTGAGE MONITOR

APRIL 2019 | 10


Geography (CBSA)

Boise City, IDSpokane, WAOgden, UTSt. Louis, MO-ILLas Vegas, NVSalt Lake City, UTProvo, UTColorado Spring, COChattanooga, TN-GAAtlanta, GA

Rank

12345678910


+11.8%+10.9%+9.5%+9.0%+8.6%+7.5%+6.9%+6.6%+6.6%+6.5%

Annual Home Price Growth1 Year Ago

+12.7%+12.0%+10.9%+7.0%+15.4%+10.8%+10.2%+10.5%+5.8%+7.9%

Rank1 Year Ago

467382811105632

Geography (CBSA)

Baltimore, MDLos Angeles, CAOxnard, CABridgeport, CTScranton, PASan Diego, CASeattle, WABaton Rouge, LASan Francisco, CASan Jose, CA

Rank

919293949596979899100


+1.5%+1.4%+1.4%+1.3%+1.3%+1.1%+1.0%+0.3%+0.1%-6.1%

Annual Home Price Growth1 Year Ago

+3.6%+8.6%+6.2%+1.9%+4.0%+7.9%+14.4%+6.1%+12.5%+24.0%

Rank1 Year Ago

83214896783135251

Seattle, WA: +1.0%

Scranton, PA: +1.3%Salt Lake City, UT: +7.5%

Provo, UT: +6.9%

Oxnard, CA: +1.4%

Ogden, UT: +9.5%

Los Angeles, CA: +1.4%

Bridgeport, CT: +1.3%

St. Louis, MO-IL: +9.0%

Spokane, WA: +10.9%

San Jose, CA: -6.1%San Francisco, CA: +0.1%

San Diego, CA: +1.1%

Las Vegas, NV: +8.6%

Colo Springs, CO: +6.6%

Chattanooga, TN-GA: +6.6%

Boise City, ID: +11.8%

Baton Rouge, LA: +0.3%

Baltimore, MD: +1.5%

Atlanta, GA: +6.5%

ANNUAL HOME PRICE GROWTH RATE BY METRO AREATOP 10 (GREEN) AND BOTTOM 10 (BLUE) MARKETS

» California markets as a whole slid heavily down the rankings in terms of home price growth, with the state's largest 10 markets falling an average of 55 spots

» San Jose, San Francisco and Seattle experienced the steepest drops

» In a striking inversion from a geographic perspective, San Jose fell from #1 to #100 in terms of home price growth, while Seattle and San Francisco dropped from #3 and #5 to #97 and #99 respectively

» The median home price in San Jose is now down 6% from last year following three consecutive months of negative year-over-year movement; this comes after having seen double-digit growth for much of the last few years

» The markets seeing the highest growth rates are now in the western mountain regions, led by Idaho, eastern Washington state and Utah

ANNUAL HOME PRICE GROWTH RATE BY METRO AREATOP 10 (GREEN) AND BOTTOM 10 (BLUE) MARKETS



MORTGAGE MONITOR

APRIL 2019 | 11

$717

$1,3

89

$740

$1,2

47

$1,1

73

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

1996

-05

1997

-05

1998

-05

1999

-05

2000

-05

2001

-05

2002

-05

2003

-05

2004

-05

2005

-05

2006

-05

2007

-05

2008

-05

2009

-05

2010

-05

2011

-05

2012

-05

2013

-05

2014

-05

2015

-05

2016

-05

2017

-05

2018

-05

2019

-05

Mon

thly

P&I

Pay

men

t

MONTHLY P&I PAYMENT TO PURCHASE MEDIAN PRICED HOME(WITH 20% DOWNPAYMENT AT PREVAILING 30-YEAR INTEREST RATE)

34.5%

23.4%

22.0%

2.5%

4.0%

5.5%

7.0%

8.5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

1997

-05

1998

-05

1999

-05

2000

-05

2001

-05

2002

-05

2003

-05

2004

-05

2005

-05

2006

-05

2007

-05

2008

-05

2009

-05

2010

-05

2011

-05

2012

-05

2013

-05

2014

-05

2015

-05

2016

-05

2017

-05

2018

-05

2019

-05

Fred

die

30-Y

ear F

ixed

Rat

e

Paym

ent -

to-In

com

e R

atio

NATIONAL PAYMENT-TO-INCOME RATIO*Payment-to-Income Ratio (Left Axis) Freddie 30-Year Fixed Interest Rate (Right Axis)

*The National Payment-to-Income Ratio is the share of median income needed to make the monthly principal and interest payment on the purchase of the median priced home using a 20% down 30-year fixed rate mortgage at the prevailing interest rate

» Falling rates have already had a positive impact on affordability, with the monthly payment needed to purchase the average-priced home with a 20% down payment declining by 6% in the last six months

» It currently requires $1,173 per month to make that purchase, the lowest such payment in more than a year

» When we factor income into the equation, we see that it takes 22% of the median income to purchase the average-priced home

» While that’s the lowest payment-to-income ratio in more than a year as well, and far below the long-term average of 25.1%, ratios remain higher than when the market slowdown began in February 2018

» That the market reacted in terms of slowing home price growth even before we hit that long-term average suggests that a 25% percent payment-to-income ratio may not be sustainable in today’s market, whether due to excess non-mortgage related debt, lending standards or other factors

NATIONAL PAYMENT-TO-INCOME RATIO*MONTHLY P&I PAYMENT TO PURCHASE MEDIAN PRICED HOME(WITH 20% DOWNPAYMENT AT PREVAILING 30-YEAR INTEREST RATE)




MORTGAGE MONITOR

APRIL 2019 | 12

» The map to the left shows payment-to-income ratios on a state-by-state level.

» The western U.S. and pockets of the Northeast are noticeably less affordable than much of the country at large

» In contrast, housing costs require significantly less of median monthly income in the Midwest and parts of the southeastern U.S.17%

17%20%

36%24%

18%

33%

22%

18%18%

14%

22%

17%13%22% 16%

22%

33%

15%

18%

18%

26%

23%

22%22%

20%

16%

18%

21%

22%

25%

28%

12%

15%

26%

17%

26%

17%

20%

21%

25%

15%

26%

22%

PAYMENT-TO-INCOME RATIO BY STATE AS OF MAY 2019While affordability remains relatively strong at the national level, recent pullbacks in rates haven’t right-sized the affordability equation across the board geographically

PAYMENT-TO-INCOME RATIO BY STATE AS OF MAY 2019


https://www.blackknightinc.com/https://www.blackknightinc.com/data-reports/?report-type=mortgage-monitor&report-year=2018http://www.blackknightinc.com/wp-content/uploads/2019/05/BKI_MM_Apr2019_Chart18.pdf


MORTGAGE MONITOR

APRIL 2019 | 13

DELTA FROM LONG-TERM (1995-2003) BENCHMARK AS OF NOVEMBER 2018GREEN AREAS REPRESENT MARKETS THAT ARE LESS AFFORDABLE THAN LONG-TERM BENCHMARKS

-11.0%

+3.4%

+0.3%

+6.3%

+2.0%

+1.0%+0.1%

-0.3%

-1.3%

-5.4%

-6.4%

-1.8%

-7.6%-5.2%

-4.1%-5.1%

-0.7%

-6.0%

-8.0%

-2.1%

-2.9%

-7.7%

-3.1%

-2.8%

-3.8%

-6.8%

-0.5%

-3.7%

-1.4%1.3%

-0.9%

-5.2% -8.1%-4.0%-7.5%

-0.4%

-3.1%

-6.6%

-2.6%

-3.7%

-0.4%

-3.8%

-6.0%

-1.4% -12.9%+4.0%

+1.8%

+0.8% -1.6%

-5.4%

-6.7%

-1.8%

-2.9%

-7.4%

-2.6%

-8.6%-5.3% -6.1%

-2.5%

-6.6%

-3.0%

-3.8%

-4.7%

-4.0%

-2.3%

-4.8%

-2.6%

-2.7%

-6.5% -9.4%

-1.2%

-9.1%

-8.6%

-0.3%

-7.9%

-4.6%

-7.6%

-3.9%

-2.2%

-1.2%

-4.5%

-5.2%

-1.3%

DELTA FROM LONG-TERM (1995-2003) BENCHMARK AS OF MAY 2019GREEN AREAS REPRESENT MARKETS THAT ARE LESS AFFORDABLE THAN LONG-TERM BENCHMARKS

» Comparing each state to its own long-term benchmarks helps flesh out the affordability story

» In November 2018, when rates were near 5%, 10 states were above their own long-term benchmarks, making them less affordable than historic averages

» California required 6% more of the median income to buy the average home than the state's long-term average

» As of May 2019, four states – California, Hawaii, Maine and Nevada plus the District of Columbia – remain less affordable than their own long-term averages

» The disparity is most noticeable in California, where – despite interest rate declines and, in some cases, rapidly slowing home price growth – it still requires 4% more of the median household income to buy the average-priced home, far less affordable than long-term benchmarks

» This suggests that, while falling rates may have the ability to reheat some housing markets across the country, it may not be enough to alleviate the affordability constraints that have been putting downward pressure on California housing markets


DELTA FROM LONG-TERM (1995-2003) BENCHMARK AS OF NOVEMBER 2018GREEN AREAS REPRESENT MARKETS THAT ARE LESS AFFORDABLE THAN LONG-TERM BENCHMARKS

DELTA FROM LONG-TERM (1995-2003) BENCHMARK AS OF MAY 2019GREEN AREAS REPRESENT MARKETS THAT ARE LESS AFFORDABLE THAN LONG-TERM BENCHMARKS



MORTGAGE MONITOR

APRIL 2019 | 14

Here we review both purchase and refinance-related origination growth in Q1 2019 while breaking down refinance growth by rate/term vs. cash-out origination volumes. This information has been compiled from Black Knight’s McDash loan-level mortgage performance database. You may click on each chart to see its contents in high-resolution.

APRIL 2019 Q1 ORIGINATION VOLUMES

22%

49%

61%

73%

60%

52%

51% 59%

65%

73%

62%

71% 75% 77%

48%

63%

55%

49%

44%

39%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2000Q1

2001Q1

2002Q1

2003Q1

2004Q1

2005Q1

2006Q1

2007Q1

2008Q1

2009Q1

2010Q1

2011Q1

2012Q1

2013Q1

2014Q1

2015Q1

2016Q1

2017Q1

2018Q1

2019Q1

REFINANCE SHARE OF MORTGAGE ORIGINATIONS(FIRST QUARTER COMPARISON SINCE TURN OF CENTURY)

$0.0

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0

$700.0

$800.0

$900.0

$1000.0

2004Q1

2005Q1

2006Q1

2007Q1

2008Q1

2009Q1

2010Q1

2011Q1

2012Q1

2013Q1

2014Q1

2015Q1

2016Q1

2017Q1

2018Q1

2019Q1

FIRST LIEN MORTGAGE ORIGINATIONS – BY QUARTERPurchase Refinance

» Total mortgage originations edged slightly higher in Q1 2019 to $406B, as rising refinance origination volumes more than offset seasonal declines in purchase lending

» Refinance lending rose by 19% for the quarter to $157B, breaking a cycle of four consecutive quarterly declines caused by rates rising throughout the 2018 calendar year

» Refis accounted for 39% of total dollars lent in the first quarter – though up from 32% in Q4 2018, it is the lowest such Q1 refinance share in 19 years, a reminder that, despite recent increases, refinance volumes remain historically low

» Despite recent increases, Q1 refinance origination volumes came in 10% below last year’s levels

» Purchase lending dipped by 9% seasonally for the quarter, but the annual growth rate rising to 12% in Q1 suggests that declining rates may be easing headwinds in the purchase market as well

FIRST LIEN MORTGAGE ORIGINATIONS – BY QUARTER REFINANCE SHARE OF MORTGAGE ORIGINATIONS(FIRST QUARTER COMPARISON SINCE TURN OF CENTURY)



MORTGAGE MONITOR

APRIL 2019 | 15

» The rise in rate/term lending more than offset the slight decline seen in cash-out loans during that same timespan

» The oversized rise in rate/term lending dropped the cash-out share of refi lending to 62% from 78% in Q4 2018

» While a more pronounced reaction in rate/term loans due to declining interest rates is expected, it's somewhat surprising for cash-out lending to fall in that same environment

» Early Q2 numbers suggest an even more pronounced rise in rate/term loans, as rates bottomed out near the end of Q1 and an estimated 4.9M refinance candidates remained as of mid-May

» Those same early insights suggest cash-out lending edging upward early in Q2 as well, although that growth continues to be dwarfed by borrowers refinancing to capitalize on recent rate reductions

62%

0%

20%

40%

60%

80%

100%

$B

$50B

$100B

$150B

$200B

$250B

$300B

$350B

$400B

$450B

$500B

2005

-Q1

2005

-Q2

2005

-Q3

2005

-Q4

2006

-Q1

2006

-Q2

2006

-Q3

2006

-Q4

2007

-Q1

2007

-Q2

2007

-Q3

2007

-Q4

2008

-Q1

2008

-Q2

2008

-Q3

2008

-Q4

2009

-Q1

2009

-Q2

2009

-Q3

2009

-Q4

2010

-Q1

2010

-Q2

2010

-Q3

2010

-Q4

2011

-Q1

2011

-Q2

2011

-Q3

2011

-Q4

2012

-Q1

2012

-Q2

2012

-Q3

2012

-Q4

2013

-Q1

2013

-Q2

2013

-Q3

2013

-Q4

2014

-Q1

2014

-Q2

2014

-Q3

2014

-Q4

2015

-Q1

2015

-Q2

2015

-Q3

2015

-Q4

2016

-Q1

2016

-Q2

2016

-Q3

2016

-Q4

2017

-Q1

2017

-Q2

2017

-Q3

2017

-Q4

2018

-Q1

2018

-Q2

2018

-Q3

2018

-Q4

2019

-Q1

Cash

-out

Sha

re o

f Firs

t Lie

n Re

fis (B

y $O

LA)

Firs

t Lie

n Re

finan

ce O

rigin

atio

ns in

$Bi

llion

s

FIRST LIEN REFINANCE ACTIVITYCash-out Refi Originations (Left Axis) Rate/Term Refi Originations (Left Axis) Cash-out Share of First Lien Refis (Right Axis) Rate/term refinance lending more than

doubled from $29B in Q4 2018 to $59B in Q1 2019, pushing total refi lending to its highest level since Q1 2018

APRIL 2019 Q1 ORIGINATION VOLUMES

FIRST LIEN REFINANCE ACTIVITY



MORTGAGE MONITOR

APRIL 2019 | 16

Apr-19 Monthly ChangeYTD

ChangeYearly

ChangeDelinquencies 3.47% -5.05% -7.44% -5.41%

Foreclosure 0.50% -2.23% -2.73% -18.77%

Foreclosure Starts 41,400 4.28% -17.53% -16.02%

Seriously Delinquent (90+) or in Foreclosure 1.40% -3.51% -5.25% -20.97%

New Originations (data as of Mar-19) 589K 44.0% 32.8% 6.9%

Apr-19 Mar-19 Feb-19 Jan-19 Dec-18 Nov-18 Oct-18 Sep-18 Aug-18 Jul-18 Jun-18 May-18 Apr-18

Delinquencies 3.47% 3.65% 3.86% 3.75% 3.88% 3.71% 3.64% 3.97% 3.50% 3.61% 3.74% 3.64% 3.67%

Foreclosure 0.50% 0.51% 0.51% 0.51% 0.52% 0.52% 0.52% 0.52% 0.54% 0.57% 0.56% 0.59% 0.61%

Foreclosure Starts 41,400 39,700 40,300 50,200 46,300 45,200 50,600 40,000 47,100 48,300 43,500 44,900 49,300

Seriously Delinquent (90+) or in Foreclosure 1.40% 1.45% 1.47% 1.48% 1.51% 1.50% 1.48% 1.51% 1.52% 1.59% 1.63% 1.70% 1.78%

New Originations 589K 409K 377K 443K 472K 533K 493K 612K 576K 618K 610K 555K

3.67

%

3.64

%

3.74

%

3.61

%

3.50

%

3.97

%

3.64

%

3.71

%

3.88

%

3.75

%

3.86

%

3.65

%

3.47

%

Apr-1

8

May-1

8

Jun-1

8Ju

l-18

Aug-1

8

Sep-1

8

Oct-1

8

Nov-1

8

Dec-1

8

Jan-1

9

Feb-1

9

Mar-1

9

Apr-1

9

TOTAL DELINQUENCIES

555K

610K

618K

576K

612K

493K

533K

472K

443K

377K

409K 5

89K

Apr-1

8

May-1

8

Jun-1

8Ju

l-18

Aug-1

8

Sep-1

8

Oct-1

8

Nov-1

8

Dec-1

8

Jan-1

9

Feb-1

9

Mar-1

9

NEW ORIGINATIONS

APRIL 2019 DATA SUMMARY

APRIL 2019 APPENDIX



MORTGAGE MONITOR

APRIL 2019 | 17

Month Total Active Count 30 DAYS 60 DAYS 90+ DAYS FC Total NC FC StartsAverage Days

Delinquent for 90+Average Days

Delinquent for FCRatio of

90+ to FC

1/31/05 47,706,128 1,197,062 339,920 458,719 276,745 2,272,446 50,922 242 324 165.8%1/31/06 50,900,620 1,242,434 387,907 542,378 258,613 2,431,332 76,477 207 308 209.7%1/31/07 53,900,458 1,425,030 468,441 551,439 393,973 2,838,883 117,419 203 267 140.0%1/31/08 55,478,782 1,743,420 676,266 950,639 813,560 4,183,885 195,033 190 256 116.8%1/31/09 55,788,441 2,001,314 932,436 1,878,981 1,321,029 6,133,760 250,621 193 323 142.2%1/31/10 55,098,009 1,945,589 903,778 2,972,983 2,068,572 7,890,922 292,308 253 418 143.7%1/31/11 53,861,778 1,750,601 746,634 2,078,130 2,245,250 6,820,615 277,374 333 527 92.6%1/31/12 52,687,781 1,592,463 652,524 1,796,698 2,205,818 6,247,503 223,394 395 666 81.5%1/31/13 51,229,692 1,464,583 587,661 1,551,415 1,742,689 5,346,348 156,654 460 803 89.0%1/31/14 50,380,779 1,341,074 529,524 1,278,955 1,213,046 4,362,599 97,467 486 935 105.4%1/31/15 50,412,744 1,238,453 465,849 1,060,002 884,901 3,649,204 93,280 509 1,031 119.8%1/31/16 50,541,353 1,298,682 444,594 831,284 659,237 3,233,797 71,900 495 1,047 126.1%1/31/17 50,871,357 1,108,712 389,768 663,521 480,598 2,642,599 70,357 454 1,013 138.1%1/31/18 51,155,753 1,083,162 412,676 706,623 336,613 2,539,074 62,312 364 932 209.9%1/31/19 51,896,438 1,074,044 367,750 503,655 264,875 2,210,325 50,196 391 830 190.1%2/28/19 51,854,081 1,138,116 362,154 500,822 263,707 2,264,798 40,289 385 839 189.9%3/31/19 52,081,244 1,061,924 348,443 492,889 264,451 2,167,707 39,657 391 853 186.4%4/30/19 52,228,211 1,003,514 335,160 473,565 259,290 2,071,529 41,356 393 880 182.6%

LOAN COUNTS AND AVERAGE DAYS DELINQUENT

APRIL 2019 APPENDIX



MORTGAGE MONITOR

APRIL 2019 | 18

State Del % FC % NC %Year/Year Change in

NC%State Del % FC % NC %

Year/Year Change in

NC%State Del % FC % NC %

Year/Year Change in

NC%National 3.5% 0.5% 4.0% -7.3% National 3.5% 0.5% 4.0% -7.3% National 3.5% 0.5% 4.0% -7.3%

MS 9.3% 0.7% 9.9% 6.5% TX 4.4% 0.3% 4.7% -13.1% WI* 3.1% 0.5% 3.6% -2.5%LA* 6.8% 0.9% 7.7% 2.0% OH* 3.9% 0.7% 4.6% -5.0% VA 3.3% 0.2% 3.5% 3.4%AL 6.2% 0.4% 6.6% -0.1% NJ* 3.7% 0.8% 4.6% -12.5% AK 3.0% 0.2% 3.2% -4.8%WV 5.6% 0.5% 6.1% 0.5% NC 4.1% 0.4% 4.5% 1.5% WY 2.8% 0.2% 3.1% -7.2%AR 5.2% 0.5% 5.7% 5.5% VT* 3.3% 1.1% 4.4% 4.5% NV 2.5% 0.5% 3.0% -11.1%ME* 4.0% 1.6% 5.6% -3.9% KS* 3.9% 0.5% 4.3% -0.1% DC 2.2% 0.5% 2.8% -11.3%RI 4.7% 0.8% 5.5% -2.5% NM* 3.5% 0.8% 4.3% -4.4% AZ 2.5% 0.2% 2.7% -1.4%IN* 4.7% 0.7% 5.4% -1.8% FL* 3.5% 0.8% 4.3% -34.8% SD* 2.3% 0.4% 2.7% 12.7%OK* 4.5% 0.8% 5.3% -2.0% KY* 3.5% 0.6% 4.1% -3.9% MT 2.1% 0.3% 2.5% 2.7%GA 4.9% 0.3% 5.2% -2.1% HI* 2.7% 1.4% 4.1% -7.0% MN 2.3% 0.2% 2.4% 8.8%PA* 4.5% 0.7% 5.2% -5.3% IL* 3.4% 0.7% 4.1% -0.3% UT 2.2% 0.2% 2.4% -8.1%NY* 3.6% 1.5% 5.2% -4.8% MO 3.7% 0.3% 4.0% -0.6% CA 2.1% 0.2% 2.2% -9.8%DE* 4.3% 0.8% 5.1% -3.8% MA 3.5% 0.5% 3.9% -6.0% ND* 1.7% 0.5% 2.2% 0.5%MD* 4.5% 0.6% 5.1% 0.9% NE* 3.5% 0.3% 3.7% 21.9% ID 2.0% 0.2% 2.2% -5.0%SC* 4.5% 0.6% 5.1% 1.1% MI 3.5% 0.2% 3.7% -3.0% WA 1.8% 0.3% 2.0% -8.7%CT* 4.1% 0.9% 5.1% -2.9% NH 3.4% 0.3% 3.6% -2.1% OR 1.8% 0.3% 2.0% -7.6%TN 4.5% 0.2% 4.7% -5.1% IA* 3.1% 0.5% 3.6% 5.2% CO 1.7% 0.1% 1.8% -1.8%

* - Indicates Judicial State

STATE-BY-STATE RANKINGS BY NON-CURRENT LOAN POPULATION

APRIL 2019 APPENDIX



MORTGAGE MONITOR

APRIL 2019 | 19

Mortgage Monitor Disclosures

You can reach us by email [email protected]

Follow us on Twitter@Black_KnightInc

APRIL 2019 DISCLOSURE
https://www.blackknightinc.com/https://www.blackknightinc.com/data-reports/?report-type=mortgage-monitor&report-year=2018http://www.blackknightinc.com/wp-content/uploads/2018/09/BKI_MM-Disclosures.pdfhttp://www.blackknightinc.com/wp-content/uploads/2018/09/BKI_MM-Disclosures.pdfmailto:Mortgage.Monitor%40bkfs.com%20?subject=https://twitter.com/black_knightinc?lang=en

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