The Q2 2017 U.S. Residential Property Loan Origination Report from ATTOM Data Solutions found that 22.8% of all purchase loan originations on single-family homes in Q2 2017 involved co-borrowers – multiple, non-married borrowers listed on the mortgage or deed of trust – up from 21.3% in the previous quarter and up from 20.5% in Q2 2016.
The report also “Home buyers are increasingly relying on co-borrowers to help with home purchases, particularly in high-priced markets where sizable down payments are necessary to compete,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “This rising trend in co-borrowing is helping to eke out increases in purchase loan originations despite affordability and supply constraints.”
Among 42 cities with at least 1,500 purchase loan originations on single-family homes in the second quarter, those with the highest share of co-borrowers were San Jose, Calif. (50.9%); Miami (45.2%); Seattle (39.1%); the Southern California cities of Los Angeles (31.1%) and San Diego (29.4%).
“Climbing home prices are forcing more and more borrowers to consider other options, such as leveraging a parent’s credit, in order to qualify to buy,” says Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market. “Given the ongoing concerns about the emergence of another housing bubble, it was encouraging to see that Seattle has the tenth highest average down payment in the U.S. at 14 percent.”
The median down payment for single-family homes and condos purchased with financing in Q2 2017 was $18,850, or 7.3% of the median price of the homes purchased – the highest level since Q3 2014, when it was 7.4%.
“Across Southern California, we are witnessing the prolonged effects of low listing inventory, creating greater competition among purchasers and transforming the methods of financing being utilized,” says Michael Mahon, president at First Team Real Estate, covering the Southern California market. “Higher competition among home purchasers, oftentimes involved in multiple-offer situations, is hampering the abilities of potential borrowers to leverage low-down payment loans such as FHA and VA financing options.”
Loans backed by the Federal Housing Administration accounted for 13.6% of all residential property loans originated in Q2 2017, up from 13.3% in the previous quarter but down from 14.1% in Q2 2016.
Loans backed by the U.S. Department of Veterans Affairs accounted for 6.5% of all residential property loans originated in Q2 2017, down from 6.6% in the previous quarter and down from 7.3% in Q2 2016.
The total dollar volume of loan originations in the second quarter – including purchase, refinance and HELOC originations – was nearly $509 billion, up 31% from the previous quarter but still down 12% from a year ago.
The total dollar volume of purchase loan originations in the second quarter was nearly $257 billion, up 67% from the previous quarter and up 7% from a year ago, to the highest level since Q2 2007 – a 10-year high.
The total dollar volume of refinance originations in the second quarter was more than $188 billion, up 1% from the previous quarter but still down 32% from a year ago.
Photo: Daren Blomquist