Creditors are more willing to offer loans to subprime lenders so far this year, Equifax announced Monday.
First-mortgage originations to subprime borrowers have risen by 30.5% in the first five months of 2015, compared to the same period last year. Of the 3.26 million first mortgages originated through May, 143,800 – or 4.6% – were issued to consumer with an score below 620.
That's still well below the 10% of originations in 2008, however.
Home equity installment loans rose by 29.5% for those same borrowers, albeit to just 1.5%. The average origination loan amount of a new subprime home equity loan also climbed, hitting $22,455 in May 2015 – up 11.6% from May 2014.
But according to Equifax's National Consumer Credit Trends Report, home equity lines of credit are still a rare option for subprime borrowers, who faced a higher credit limit for such loans in May 2015 compared to the same month last year.
Lending to those with weak credit is particularly low for home equity lines of credit. Of the more than 525,000 HELOCs originated in the first five months of 2015, just 7,800 of them were considered subprime, though that was up 20.4% from the year-earlier period.
Those fortunate enough to obtain HELOCs in May 2015 despite low credit scores also saw a 21.5% decrease in borrowing power from May 2014, as average credit limits fell to $35,643 compared to the average credit limit for all HELOCs of $103,588, which was 7.5% higher than in May 2014.
