“Superprime” marks improving mortgage picture

Average mortgage balances per borrower rose to $187,139 in the fourth quarter of 2014, up 0.88% from the previous quarter and up nearly 2.1% from the year-earlier quarter. However, among “superprime” borrowers, balances rose about 3% over the last year.

This is according to figures compiled by TransUnion for its quarterly mortgage credit report. This trend of rising balances played out as mortgage delinquencies fell from the 12th quarter in a row. At the end of the fourth quarter of 2014, they stood at 3.29%.

TransUnion credits this to both the continuing runoff of homes in the foreclosure pipeline and the improving economy and jobs picture. At this point, no pain from any impact of falling oil prices on energy states has appeared—every state in the country showed improvement in delinquency in the fourth quarter. TransUnion notes that this is occuring even while more nonprime mortgages are being made.

“The bigger story this past quarter is the continued rise in mortgage balances,” says Ezra Becker, vice-president of research and consulting in TransUnion’s financial services business unit. “Much of this gain can be attributed to those consumers who took advantage of a  low interest rate environment to purchase homes with jumbo mortgage loans.”

Becker says that jumbos’ share of all mortgage originations increased by 8% in the third quarter of 2014. All states except Wisconsin and Rhode Island saw increases in average mortgage balances.