More than 1.4 million (1,415,511) loans were originated on U.S. residential properties in the first quarter, 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 real estate information company RealtyTrac Inc. of Irvine. But for some areas in California the decreases are as high as 25%.
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.
“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,” says Daren Blomquist, senior vice president at RealtyTrac.
“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,” he says.
Sacramento, Dallas, Louisville, Seattle, Columbus see biggest HELOC increase
Among 50 metropolitan statistical areas with at least 5,000 total loan 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); and Columbus, Ohio (up 23 percent).
Other metro areas with a 25 percent or bigger decrease in refinance originations from a year ago were Oxnard-Thousand Oaks-Ventura, California (down 28 percent); St. Louis (down 28 percent); Sacramento, California (down 28 percent); Tucson, Arizona (down 27 percent); Louisville, Kentucky (down 26 percent); Chicago, Illinois (down 26 percent); Richmond, Virginia (down 26 percent); San Diego, California (down 25 percent); and Honolulu (down 25 percent).
Although the number of originations decreased from a year ago, the estimated total dollar volume of originations increased thanks to higher average loan amounts, says RealtyTrac. There was an estimated $444 billion ($444,560,103,469) in total loan origination dollar volume in Q1 2016, up 5 percent from the previous quarter and up 5 percent from a year ago — the fifth consecutive quarter with a year-over-year increase in loan origination dollar volume.
The total dollar amount of purchase loans originated in the first quarter was an estimated $146 billion ($145,693,394,297), down 11 percent from the previous quarter but up 8 percent from a year ago, according to RealtyTrac’s figures. The total dollar amount of refinance loans originated in the first quarter was an estimated $204 billion ($203,593,423,522), 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 ($95,273,285,650), up 34 percent from the previous quarter and up 45 percent from a year ago.
FHA loan share increases annually for fifth consecutive quarter
Among all purchase and refinance loans, 17.5 percent were FHA loans, 8.3 percent were VA loans, 0.8 percent were construction loans, and the remaining 73.4 percent were other loan types, including conventional.
FHA loans as a share of all loan originations increased 7 percent from a year ago while the VA loan share were up 5 percent and construction loans were up 19 percent. The FHA loan share has increased for five consecutive quarters, and in 10 of the 11 last quarters.