U.S. Residential Loan Origination Dollar Volume Drops to Three-Year Low in Q1 2017

U.S. Residential Loan Origination Dollar Volume Drops to Three-Year Low in Q1 2017

U.S. Residential Loan Origination Dollar Volume Drops to Three-Year Low in Q1 2017

The FINANCIAL -- ATTOM Data Solutions, curator of the nation’s largest multi-sourced property database, on May 25 released its Q1 2017 U.S. Residential Property Loan Origination Report, which shows that more than 1.4 million (1,415,847) loans were originated on U.S. residential properties (1 to 4 units) in the first quarter of 2017, down 30 percent from the previous quarter and down 21 percent from a year ago.

The total dollar volume of loan originations in the first quarter was also down 21 percent from a year ago to $347.9 billion, the lowest since Q1 2014 — a three-year low, according to Realtytrac.

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

“Rising mortgage rates made qualifying for a home purchase more difficult and refinancing an existing home loan less attractive in the first quarter,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Refinance originations in particular fell off a cliff in the first quarter to the lowest level in more than 10 years after posting double-digit percentage increases in the third and fourth quarters of 2016, indicating that some refinance demand was pulled forward late last year in anticipation of rising interest rates.

“Despite the sharp drop in purchase originations, there were some encouraging signs in the data that a larger share of first-time homebuyers participated in the housing market in the first quarter: the share of FHA buyers increased from the previous quarter after two consecutive quarters down, and the median down payment decreased following three consecutive quarters of increases,” Blomquist added. “However, the data also indicates more homebuyers needed help to qualify for a home purchase in the first quarter. Nearly 22 percent of all single family purchase originations had multiple, non-married co-borrowers on the loan, up from 20 percent a year ago.”

Highest share of co-borrowers in Miami, Seattle, San Diego, Los Angeles, Portland

Among 35 U.S. cities with at least 1,000 single family purchase originations in Q1 2017, those with the highest share of non-married co-borrowers were Miami, Florida (40.2 percent); Seattle, Washington (37.4 percent); San Diego, California (28.9 percent); Los Angeles, California (28.2 percent); and Portland, Oregon (27.7 percent).

“Throughout Southern California housing affordability continues to be a contributing cause supporting what has been viewed as an extremely tight available listing market year to date,” said Michael Mahon, president at First Team Real Estate, covering the Southern California market. “Increased competition amongst buyers for low available listing inventory and increasing multiple-offer scenarios are driving down use of leveraging mortgages in support of resale transactions while driving increased use of all-cash offers to gain acceptance over competing buyers.”

Refinance origination dollar volume drops to more than 10-year low

A total of 675,899 refinance loans secured by U.S. residential properties (1 to 4 units) were originated in Q1 2017, down 36 percent from the previous quarter and down 22 percent from a year ago. The total dollar volume of refinance originations in the first quarter was $167.9 billion, down 39 percent from the previous quarter and down 26 percent from a year ago to the lowest level since Q1 2006 — as far back as data is available in the report.

“Seattle saw the number of purchase and refinance loans decline significantly compared to a year ago, but the reasons are different for each loan type,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market, where refinance originations declined 17 percent from a year ago and purchase originations were down 5 percent from a year ago. “Purchase loans are down in part because of the decline in home sales due to very limited inventory. They’re also down because we’ve seen an increase in the number of all-cash home purchases. Rising interest rates can be blamed for the drop in refinance loans.”

Only five of the 98 metro areas analyzed in the report posted year-over-year increases in refinance originations in Q1 2017: Kansas City (up 41 percent); Lexington, Kentucky (up 17 percent); Memphis, Tennessee (up 12 percent); Greenville, South Carolina (up 2 percent); and Atlanta, Georgia (up 2 percent).

Purchase origination dollar volume drops to three-year low

A total of 513,350 purchase loans secured by U.S. residential properties (1 to 4 units) were originated in Q1 2017, down 29 percent from the previous quarter and down 18 percent from a year ago. The total dollar volume of purchase originations in the first quarter was $136.6 billion, down 27 percent from the previous quarter and down 14 percent from a year ago to the lowest level since Q1 2014 — a three-year low.

Twelve of the 98 metro areas analyzed in the report posted year-over-year increases in purchase originations in the first quarter, bucking the national trend. Those included Hartford, Connecticut (up 4 percent); Richmond, Virginia (up 4 percent); Los Angeles, California (up 4 percent); Memphis, Tennessee (up 3 percent); and Tucson, Arizona (up 1 percent).

HELOC originations drop to three-year low

A total of 226,598 Home Equity Lines of Credit (HELOCs) secured by U.S. residential properties (1 to 4 units) were originated in Q1 2017, down 14 percent from the previous quarter and down 22 percent from a year ago. The total dollar volume of HELOCs originated during the first quarter was $43.4 billion, down 14 percent from the previous quarter and down 18 percent from a year ago to the lowest level since Q1 2014 — a three-year low.

Fourteen of the 98 metro areas analyzed in the report posted year-over-year increases in HELOC originations in the first quarter, bucking the national trend. Those included Salt Lake City, Utah (up 26 percent); Las Vegas, Nevada (up 13 percent); Providence, Rhode Island (up 5 percent); Seattle, Washington (up 2 percent); and Houston, Texas (up 1 percent).

“The rise in home equity lines of credit tells me that many homeowners are choosing to invest in their current home because they cannot find a new home to purchase,” said Gardner of Windermere Real Estate in Seattle. “As long as inventory remains scarce, I expect this trend is one that will undoubtedly continue at least through the end of the year.”

FHA and VA loan share down from year ago

Loans backed by the Federal Housing Administration (FHA) accounted for 13.3 percent of all residential property loans originated in Q1 2017, up from 12.4 percent in the previous quarter but still down from 13.8 percent in the first quarter of 2016.

Loans backed by the U.S. Department of Veterans Affairs (VA) accounted for 6.6 percent of all residential property loans originated in Q1 2017, down from a more than 10-year high of 7.6 percent in the previous quarter and down from 6.8 percent in Q1 2016.