About 1.4 million residential mortgages (purchases and refinances) were originated in the U.S. in the first quarter of this year – a decrease of 12% compared with the fourth quarter of 2015 and a decrease of 8% compared with the first quarter of 2015, according to estimates recently released by RealtyTrac.
Year over year, purchase originations increased 3%, while refinances decreased 20%.
Meanwhile, home equity line of credit (HELOC) originations increased 10% from a year earlier.
“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 of RealtyTrac, in a statement. “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.”
Metro areas that saw the biggest year-over-year increases in purchase originations in the first quarter included Baltimore (up 26%); Tucson, Ariz. (up 18%); Louisville, Ky. (up 17%); Minneapolis-St. Paul, Minn. (up 14%); Nashville, Tenn. (up 14%), Washington, D.C. (up 13%); Cleveland (up 13%); Atlanta (up 12%); Indianapolis (up 12%); Kansas City, Mo. (up 11%); St. Louis (up 11%); and Chicago (up 11%).
Although the number of originations decreased from a year ago, the estimated total dollar volume of originations increased thanks to higher average loan amounts. There was an estimated $444 billion in total loan origination volume – up 5% compared with the fourth quarter and up 5% from the first quarter of 2015.
In fact, it was the fifth consecutive quarter with a year-over-year increase in loan origination dollar volume, RealtyTrac reports.
Of this, about $146 billion was for purchase loans – down 11% from the previous quarter but up 8% from a year earlier. The total dollar amount of refinance loans originated in the first quarter was an estimated $204 billion, up 8% from the previous quarter but down 9% from a year earlier.
The total dollar amount of HELOCs originated in the first quarter was an estimated $95 billion, up 34% from the previous quarter and up 45% from a year earlier.
Looking at originations by loan type, mortgages backed by the Federal Housing Administration (FHA) were 17.5% of all loans – an increase of 7% compared with the first quarter of 2015. About 8.3% were Veterans Affairs loans – up 5% compared with a year earlier – and about 0.8% were construction loans, which is up 19%.
The remaining 73.4% were other loan types, including conventional.
The FHA share of total originations has increased for the past five consecutive quarters and in 10 of the last 11 quarters, RealtyTrac reports.
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