Mortgage production volume decreased by an average of 11% during the fourth quarter of 2013, according to Richey May's Fourth Quarter Trend Report.
Purchase volume fell by an average of 12% while refinance volume fell by an average of 9% during the quarter.
Most lenders saw production decline between 6% and 55%, according to the report.
In response to declining purchase volume, some lenders began to loosen their credit requirements. As a result, the average FICO score for loans closed dropped by 2% – with more lenders closing loans with scores ranging from 651 to 700 and fewer closing loans with scores above 750.
Approximately one-third of lenders that had not previously extended credit to borrowers with scores under 600 began to do so during the fourth quarter, according to the report.
The report is based on information provided by 29 independent mortgage banking firms.
‘Lenders are trying a lot of different things to keep production levels up – lending to borrowers with lower FICO scores is just one of them,’ says Ken Richey, managing partner of Richey May, in a release. ‘In order to maintain a competitive edge, lenders need to know what their competition is doing.’
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