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Credit Profile of Purchase Mortgage Borrowers on an Upswing

January 10, 2019 Raymond Bartreau

During Q3 2018, the Pacific region of the United States had the highest share of “excellent” credit scores for purchase mortgages. New England was just a few ticks behind. For refinance loans, the Mountain region had the highest share of top credit score borrowers with the New England and Pacific regions taking the second- and third-place spots.

Across the country, the share of credit score categories differed for each mortgage product according to the Q3 2018 Mortgage Consumer Profile Report published by Best Rate Referrals.

Estimated Credit Scores Improved for the Purchase Mortgage Market

The share of “excellent” credit scores increased in Q3 2018 for borrowers seeking purchase mortgages, up from 16.7% in Q2 2018 to 22.0% in Q3 2018, according to the Q3 2018 Mortgage Consumer Profile Report. Meanwhile, the share of purchase mortgage borrowers with “good” or “fair” credit scores declined during the same period. Though the share of borrowers with “good” credit scores was down from Q2 2018 to Q3 2018, the Q3 2018 share of “good” credit score borrowers was up significantly from 2017, as shown in the chart below.

Credit Scores for Refinance Market Strong, Despite Minor Growth in Share of “Fair” Credit Score Borrowers

Although “fair” was the only credit score category with increasing refinance mortgage share in Q3 2018, 93% of all prospective borrowers seeking refinance mortgages during Q3 had “excellent” or “good” credit scores. During the second half of 2017, “good” credit scores controlled almost the entire refinance market. In Q3 2018, the “good” credit score share was down to less than two-thirds of the total refinance market, with “excellent” accounting for more than a quarter of all refinance inquiries.

Reverse Mortgage Inquiry Volume Down, Drastically Reducing the Share of Prospective Reverse Mortgage Borrowers with “Good” Credit Scores

The share of prospective reverse mortgage borrowers with “excellent” or “fair” credit scores increased in Q3 2018 compared to the prior quarter, drastically shrinking the share of reverse mortgage borrowers with “good” credit scores. In 2017, “good” credit scores accounted for 84.8% of all reverse mortgage inquiries. By Q3 2018, the share of prospective borrowers with “good” credit scores inquiring about reverse mortgages was down to just 42.3%. During this time, inquiry volume for reverse mortgages decreased across all credit score categories.

Profiles of Prospective Borrowers Are Continually Evolving

In order for mortgage marketers, including bankers, brokers and loan originators, to engage and connect with prospective borrowers, they must understand their target audiences. The Q3 2018 Mortgage Consumer Profile Report provides data to help mortgage marketers learn about the profiles of consumers actively inquiring about purchase, refinance and reverse mortgage products.

Click here to download your free copy of the Q3 2018 Mortgage Consumer Profile Report.

About the Author

Raymond Bartreau

Raymond Bartreau is the Senior Vice President of Lending Partnerships at Digital Media Solutions, LLC (DMS), an industry leader in the world of customer acquisition and retention that helps clients maximize their digital marketing to beat the competition and accelerate growth. In this role, Raymond heads DMS subsidiary Best Rate Referrals, an award-winning consumer finance marketing firm with NMLS operating licenses in most states. In 2018, Best Rate Referrals expanded into the world of personal finance with the launch of Loan Advisor, a new online marketplace designed to provide consumers with simple and fast personal loan quotes from lenders for free. A leader with more than a decade of combined financial services and direct marketing experience, Raymond Bartreau has spent his career providing lenders with the strategies and insights to better connect with consumers amid an ever changing, rate-driven market. An impressive list of accolades speaks to Ray’s steady stream of success. He was a 2017 recipient of the HousingWire Insiders Award, made the National Mortgage Professional magazine list of the top 40 under 40 and became a Mortgage Professional Association “Hot 100” on two separate occasions. An experienced speaker, Ray has shared his insight at a number of national conferences, including HousingWire’s Engage.Marketing Summit and the Power Originator Summit. As Senior Vice President of Lending Partnerships at DMS, Raymond oversees operations for DMS Consumer Finance, comprised of award-winning consumer finance marketing companies including Best Rate Referrals, Better Loan Choice and Got Consumer.

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