Real estate loan originations continued strong growth in the last three months of 2016 as homeowners continued to refinance despite — or perhaps because of — rising mortgage rates, according to an ATTOM Data Solutions’ report released Thursday.
Banks, credit unions and online companies originated $461 billion in real estate loans in the fourth quarter, 8% more than in 2015’s fourth quarter, according to the Irvine, Calif.-based real estate analytics company’s Q4 2016 U.S. Residential Property Loan Origination Report.
Fourth-quarter 2016 originations consisted of:
- Purchase loans of $161 billion, down 25% from the previous quarter and down 8% from a year ago.
- Refinance loans of $246 billion, down 5% from 2016’s third quarter but still up 27% from a year ago.
- Home equity lines of credit of $53 billion, down 12% from the previous quarter and down 8% from a year ago.
Daren Blomquist, senior vice president at ATTOM Data Solutions, said refinance originations continued to post strong numbers compared to a year ago in the fourth quarter even as purchase originations decreased on a year-over-year basis for the second consecutive quarter.
“The increase in refinance originations is surprising given the rising interest rates in the fourth quarter, but many homeowners may have been trying to lock in still relatively low interest rates before those interest rates rose further,” Blomquist said. “I would expect this to be a short-term trend.”
Refinance gains from the year-ago quarter were largest in Olympia, Wash. (+108%); Spokane, Wash. (+77%); Boulder, Colo. (+74%); San Diego (+73%); and Eugene, Ore. (+72%) — among the 99 metropolitan statistical areas with at least 2,500 loan originations in the fourth quarter.
Purchase originations had their biggest drops in Naples, Fla. (down 23%); Austin, Texas (-20%); Fort Collins, Colo. (-19%); San Antonio, Texas (-18%) and Reno, Nev. (-15%).
Among the top five purchase loan originators, the three non-banks all saw year-over-year increases in purchase loan originations: Quicken Loans (14,678, +4%); Caliber Home Loans (12,075, + 21%); and Fairway (9,149, +19%). Meanwhile the two traditional big banks in the top five both posted year-over-year decreases in purchase loan activity in Q4 2016: Wells Fargo down (10,826, -5%); and JP Morgan Chase (7,994, -15%).
The report also found the median down payment for house and condo loans was 6% of the median sales price nationwide, the lowest down payment percentage since 2012, but still close to twice the 3.3% in 2006 during the last housing boom.
