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Subprime Mortgage Originations Rise Across U.S.

ATLANTA, Sept. 21, 2015 /PRNewswire/ -- Mortgage originations to those with subprime credit scores continued to climb steadily over the first five months of 2015, according to data from the latest Equifax (NYSE: EFX) National Consumer Credit Trends Report.

Each category - first mortgages, home equity installment (HE) loans and home equity lines of credit (HELOC) - showed significant increases in subprime originations over the same period a year ago. The number of first mortgage originations to borrowers with low credit scores was up 30.5 percent, HE loans was up 29.5 percent, and HELOCs rose 20.4 percent.

Despite the considerable increases in subprime originations, their overall numbers remain only a small fraction of total originations across the mortgage lending industry and are well off the pace of subprime lending prior to the Great Recession, according to Equifax consumer credit data. A subprime credit score is generally considered to be below 620.

One area where lending to those with low credit scores remains particularly slow is for HELOCs. Of the more than 525,000 HELOCs originated in the first five months of 2015, just 7,800 of them were considered subprime, having an Equifax Risk Score™ of less than 620. Those fortunate enough to obtain HELOCs in May 2015 despite low credit scores also saw a 21.5 percent 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.

"The data make it very clear that almost nobody is getting HELOCs if they...