A CoreLogic analysis of public records data showed that the dollar volume of all mortgages – purchase and refinance combined – originated in 2016 was nearly $2 trillion, representing a 15% increase over 2015 volumes. The number of all mortgages originated last year increased 10% from 2015 to just shy of 8 million.
CoreLogic notes that last year’s originations were tilted slightly toward refinancing, which jumped year over year by 19% in dollars and 13% in number, and accounted for just over half of mortgages originated in 2016. Last year’s purchase originations increased year over year by 11% in dollars and 7% in number.
The purchase originations increase was due to an increase in home sales, a decrease in the share of homes purchased with all cash, and strong home price appreciation.
The CoreLogic public records data also shows that non-conventional loans continued to make up a large share of first-lien originations. The FHA and VA share of first-lien mortgages held steady at 25% in 2016: Year over year, there was a small decrease in the FHA share, but it was offset by an increase in the VA share.
While there was a sizable increase in mortgage originations in 2016, increases in mortgage rates over the past year and the dwindling supply of mortgages with interest rates above the current market rate should cause a decrease in mortgage originations in 2017. The average 30-year mortgage interest rate in 2016 was 3.65%, and through mid-August of this year it’s been an average of 4.05%.
Low mortgage rates last year incented many borrowers to refinance, and as of April 2017, only 10% of outstanding mortgage debt would have high enough mortgage rates to make refinancing a money-saving option.
Molly Boesel is principal and economist with CoreLogic‘s Office of the Chief Economist. Keep up with the company’s team of economists here.