Loan Originations On 1- to 4-Unit Properties Down 8 Percent Driven by Refinance Drop

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The 1.4 million  loans were originated on U.S. residential properties (1 to 4 units) in the first quarter of 2016 were down 12 percent from the previous quarter and down 8 percent from a year ago to the lowest level since the first quarter of 2014, according to a new report from RealtyTrac.com.

The loan origination report is derived from publicly recorded mortgages and deeds of trust collected by RealtyTrac in more than 950 counties accounting for more than 80 percent of the U.S. population.

The year-over-year decrease in total originations was driven by a 20 percent year-over-year decrease in refinance originations even while purchase originations increased 3 percent from a year ago and Home Equity Line of Credit (HELOC) originations increased 10 percent from a year ago.

Loan refinance market ran out of steam

Loan originations drop 8 percent from a year ago for loans on 1 to 4 units according to Daren Blomquist from RealtyTrac.com

After a surprisingly strong 2015, the mortgage refi market started running out of steam in the first quarter of 2016 despite lower mortgage interest rates,”  Daren Blomquist, senior vice president at RealtyTrac, said in a release. “Meanwhile the purchase loan market continued the pattern of slow-and-steady growth that it has been following the past two years, and HELOC originations increased on a year-over-year basis for the 16th consecutive quarter, showing that borrowers are regaining both home value and the confidence needed to increasingly leverage their home equity.”

Loan origination trends for 1 to 4 units from RealtyTrac.com

Dallas, Louisville, Seattle, Sacramento, Columbus with biggest HELOC increase

Among 50 metropolitan statistical areas with at least 5,000 total originations in the first quarter, those with the biggest year-over-year percentage increase in HELOC originations were:

  • Dallas, Texas (up 35 percent)
  • Louisville, Kentucky (up 28 percent)
  •  Seattle, Washington (up 25 percent)
  •  Sacramento, California (up 25 percent)
  • Columbus, Ohio (up 23 percent)

Refinance trends

The total dollar amount of refinances originated in the first quarter was an estimated $204 billion, up 8 percent from the previous quarter but down 9 percent from a year ago. The total dollar amount of HELOCs originated in the first quarter was an estimated $95 billion, up 34 percent from the previous quarter and up 45 percent from a year ago. FHA share increases annually for fifth consecutive quarter Among all purchase and refinances, 17.5 percent were FHA, 8.3 percent were VA, 0.8 percent were construction, and the remaining 73.4 percent were other types, including conventional. FHA as a share of all originations increased 7 percent from a year ago while the VA share were up 5 percent and construction  were up 19 percent. The FHA share has increased for five consecutive quarters, and in 10 of the 11 last quarters.

Loan refinance trends for 1 to 4 units

See the full report here at RealtyTrac.com

 

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