According to a RealtyTrac report, mortgage originations dropped in the
first quarter of this year by 20 percent over the previous quarter. The
report indicates that across all types of real estate financing, including
purchase, refinance, and equity lines of credit, total dollar volume was
down despite greater housing demand in some markets.
ATTOM Data Solutions, which operates the website RealtyTrac and manages
the largest property database in the nation, released its Q1 2017 U.S.
Residential Property Loan Origination Report indicating originations are
down 21 percent from one year ago. The report shows that in the first
quarter of 2017, over 1.4 million loans were originated on 1 to 4 unit
properties, a 30 percent drop, with total dollar volume down to $347 billion,
the lowest amount in over three years.
A new report from Freddie Mac shows mortgage rates sank to their lowest
level of the year this week, but remain higher than they were at the beginning
of the year. The data also indicates that rising rates made it more difficult
for first-time homebuyers to qualify and unattractive for existing homeowners
Los Angeles (28.2 percent) and San Diego (28.9 percent) had two of the
highest shares of non-married co-borrower applicants out of the 35 cities
nationwide with at least 1,000 single-family purchase originations. The
increase in home prices coupled with more competition among homebuyers
had fueled bidding wars and made it increasingly difficult for first-time
buyers to enter the market. Approximately 20 percent of single-family
purchase originations had multiple, non-married co-borrowers on the loan,
an increase of 20% over last year.
The refinance market has also been hit by a decline in mortgage originations.
ATTOM reports that a total of 675,899 refinance loans secured by 1-4 unit
properties were originated in Q1 2017, a drop of 36 percent from the last
quarter of 2016. Total dollar volume dropped 39 percent from last quarter,
to $167.9 billion. That is more than a 26 percent drop from a year ago,
and the lowest since the first quarter of 2006.
The total dollar volume of HELOC originations also dropped to $43.4 billion,
a decrease of 14 percent over the last quarter, a low not seen since the
first quarter of 2014. According to the report, a total of 226,598 Home
Equity Lines of Credit secured by real property were originated in Q1
2017, a 14 percent decrease.
The purchase origination total dollar volume also dipped to a three-year
low, down 27 percent from last quarter and 14 percent from a year ago
to $136.6 billion. A total of 531,350 purchase loan applications were
originated in Q1 2017, a decline of 29 percent from Q4 2016 and 18 percent
from a year ago.
Meanwhile, rates have begun to drop even as the Federal Reserve indicates
that it will continue increasing the short-term interest rate as the economy
improves. Last week’s Treasury yields drove mortgage rates to their
lowest levels since November. The 10-year Treasury bond, a key indicator
in fixed-rate mortgages, stood at 2.22 percent on May 17.
Although industry experts see long-term rates climbing, the majority of
mortgage originators are hopeful that the reduction in interest rates
will drive up loan applications until the higher rate trend reasserts
itself. However, the data was not all doom and gloom, showing that the
rate of first-time homebuyers increased, with a larger share of Americans
now seeking to participate in the housing market.