SOURCE: RealtyTrac


February 18, 2016 00:01 ET

U.S. Residential Loan Originations Decrease 14 Percent in Fourth Quarter Driven by 24 Percent Drop in Purchase Loans

Originations Still Up 1 Percent Annually Thanks to Increase in Refinances, HELOCs; Purchase Originations Post Biggest Quarterly Decrease in More Than Five Years; Big Bank Origination Share Down From Year Ago, Non-Bank Share Jumps

IRVINE, CA--(Marketwired - February 18, 2016) -  RealtyTrac® (, the nation's leading source for comprehensive housing data, today released its Q4 2015 U.S. Residential Property Loan Origination Report, which shows 1.6 million (1,552,329) loans were originated on residential properties (1 to 4 units) in the fourth quarter of 2015, a 14 percent decrease from the previous quarter but still up 1 percent from a year ago.

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 14 percent quarterly decrease was fueled primarily by a 24 percent quarter-over-quarter decline in purchase originations -- the biggest quarterly drop in purchase originations in more than five years, since the third quarter of 2010. Purchase originations accounted for 38.8 percent of all originations in the fourth quarter, while refinance originations accounted for 42.8 percent and Home Equity Line of Credit (HELOC) originations accounted for 18.5 percent. Refinance originations were down 7 percent from the previous quarter but were still up 2 percent from a year ago, while HELOC originations were also down 7 percent from the previous quarter but were still up 7 percent from a year ago.

"The 24 percent drop in purchase originations in the fourth quarter of 2015 was well above the average 15 percent seasonal slump in the fourth quarter over the past 10 years," said Daren Blomquist, vice president at RealtyTrac. "New mortgage rules implemented at the beginning of October likely contributed to the decrease, but weakness in some local economies could also be contributing to the decrease, most notably in oil producing markets such as Houston and Oklahoma City, both of which saw purchase originations decrease by double-digit percentages both quarterly and annually."

All 65 metropolitan statistical areas with at least 5,000 loan originations in the fourth quarter posted a quarterly decrease in purchase loan originations, while 31 of the 65 metros (48 percent) posted year-over-year declines in purchase originations, led by Raleigh, North Carolina, (down 41 percent); Omaha, Nebraska (down 21 percent); Cincinnati, Ohio (down 21 percent); Richmond, Virginia (down 20 percent); and Austin, Texas (down 17 percent).

"Primary causes of the decrease were lending institutions embracing new TRID guidelines implemented in October, as well as abnormally low listing inventories across the country," said Michael Mahon, president at HER Realtors, covering the Ohio markets of Cincinnati, Dayton and Columbus. "We would expect Ohio markets to bounce back quickly this year due to a growing jobs market in many areas of the state, which has led to increased activity of millennial demographic home purchasers finding Ohio communities with attractively valued homes for taking advantage of FHA loan products."

There were a total of 10 metro areas with a year-over-year decrease of 10 percent or more in purchase loan originations:

10 markets with biggest annual declines in purchase originations
MSA   Q4 2015 Purchase Loan Originations   QoQ   YoY
Raleigh, NC   2,652   -27%   -41%
Omaha-Council Bluffs, NE-IA   2,164   -45%   -21%
Cincinnati, OH-KY-IN   3,269   -40%   -21%
Richmond, VA   2,225   -36%   -20%
Austin-Round Rock, TX   5,505   -27%   -17%
Houston-The Woodlands-Sugar Land, TX   13,533   -26%   -16%
San Antonio-New Braunfels, TX   5,287   -24%   -16%
Jacksonville, FL   3,735   -24%   -12%
Oklahoma City, OK   3,737   -31%   -12%
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD   11,361   -32%   -10%

Among the 65 metro areas with at least 5,000 loan originations in the fourth quarter, those with the biggest year-over-year increase in purchase loan originations were led by Nashville, Tennessee (up 79 percent); Knoxville, Tennessee (up 41 percent); Memphis, Tennessee (up 30 percent); Providence, Rhode Island (up 25 percent); and Albuquerque, New Mexico (up 18 percent).

"Total loan originations in Seattle are higher when compared to a year ago largely because of an increase in refinance activity," said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market, where refinance originations increased 8 percent from a year ago and Home Equity Line of Credit (HELOC) originations increased 33 percent from a year ago. "The rapid rise of home prices combined with historically low interest rates continues to drive many Seattle-area homeowners to refinance.

"The decline in purchase originations in the fourth quarter is not surprising and is primarily a function of seasonality," Gardner continued, explaining the 27 percent quarterly drop in Seattle purchase loan originations. "Home sales simply slow down over the holidays. Furthermore, the Seattle housing market continues to suffer from the lowest inventory levels I've seen in almost two decades. As a result, we saw a drop in home sales during fourth quarter, which therefore caused purchase originations to fall as well. "

There were a total of 10 metro areas with a year-over-year increase of 9 percent or more in purchase loan originations:

10 markets with biggest annual increases in purchase originations
MSA   Q4 2015 Purchase Loan Originations   QoQ   YoY
Nashville-Davidson--Murfreesboro--Franklin, TN   6,602   -23%   79%
Knoxville, TN   2,320   -24%   41%
Memphis, TN-MS-AR   2,165   -23%   30%
Providence-Warwick, RI-MA   3,864   -16%   25%
Albuquerque, NM   2,111   -21%   18%
Boise City, ID   2,433   -19%   15%
Grand Rapids-Wyoming, MI   2,389   -21%   15%
Worcester, MA-CT   2,458   -24%   12%
Portland-Vancouver-Hillsboro, OR-WA   8,517   -20%   10%
Boston-Cambridge-Newton, MA-NH   11,822   -32%   9%

Markets with the biggest year-over-year increase in refinance originations were Nashville, Tennessee (up 80 percent); Knoxville, Tennessee (up 46 percent); Memphis, Tennessee (up 31 percent); Denver, Colorado (up 28 percent); Grand Rapids, Michigan (up 25 percent); Cape Coral-Fort Myers, Florida (up 23 percent); Portland, Oregon (up 21 percent); Des Moines, Iowa (up 19 percent); Tulsa, Oklahoma (up 19 percent); and Albuquerque, New Mexico (up 19 percent).

"The quarterly drop was mainly caused by four factors," said Joe Jackson, with Home Mortgage Alliance a joint venture with RE/MAX Alliance, covering Colorado, where purchase originations were down 3 percent year-over-year, counter to the 28 percent annual increase in refinance originations. "Those four factors were 1) seasonal swing, 2) TRID implementation, 3) low home-for-sale inventory, and 4) new home formations in multi versus single family housing. The first is to be anticipated each year, the second is a one-time event and may impact the first quarter but not the future, while the third and fourth are more unknowns. The low inventory could be helped in the short run by a low interest rate or rising rate, but longer term we see a shift out of multi-family into single family to give the purchase mortgage business a lift in that area."

FHA origination share drops for second straight quarter
After reaching a five-year high of 20.1 percent in the second quarter of 2015, the share of Federal Housing Administration (FHA) loan originations decreased for the second consecutive quarter in Q4 2015. FHA loan originations accounted for 17.8 percent of all loan originations during the quarter, down from 19.9 percent in the previous quarter, but still up from 15.0 percent in the fourth quarter of 2014.

Share of big bank originations decline, non-bank origination share soars
Among the top 10 loan originators in terms of number of loan originations in the fourth quarter, those with an increase in share of originations compared to a year ago were Caliber Home Loans (up 61 percent); LoanDepot (up 52 percent); Freedom Mortgage (up 40 percent); Guaranteed Rate (up 18 percent); and Quicken (up 10 percent).

Meanwhile top 10 originators with the biggest decline in share of originations compared to a year ago were JP Morgan Chase (down 30 percent); Bank of America (down 27 percent); US Bank (down 13 percent); and Wells Fargo (down 8 percent).

Originator   Loan Originations   Share of Loan Originations   1-Year Pct Change in Share   5-Year Pct Change in Share
Caliber Home Loans Total   12,474   0.99%   61%   1660%
LoanDepot Total   12,853   1.02%   52%   835%
Freedom Mortgage Total   12,454   0.98%   40%   478%
Guaranteed Rate Total   10,057   0.79%   18%   125%
Quicken Total   69,269   1.12%   10%   141%
HUD Total   19,024   5.47%   9%   242%
Wells Fargo Total   70,306   5.56%   -8%   -72%
US Bank Total   14,216   2.26%   -13%   -60%
Bank of America Total   28,637   1.68%   -27%   -64%
JP Morgan Chase Total   21,199   1.50%   -30%   76%

Report methodology
RealtyTrac analyzed recorded mortgage and deed of trust data for single family homes, condos, town homes and multi-family properties of two to four units for this report. Each recorded mortgage or deed of trust was counted as a separate loan origination. Dollar volume was calculated by multiplying the total number of loan originations by the average loan amount for those loan originations.

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RealtyTrac is a leading provider of comprehensive U.S. housing and property data, including nationwide parcel-level records for more than 130 million U.S. properties. Detailed data attributes include property characteristics, tax assessor data, sales and mortgage deed records, distressed data, including default, foreclosure and auctions status, and Automated Valuation Models (AVMs). Sourced from RealtyTrac subsidiary, the company's proprietary national neighborhood-level database includes more than 50 key local and neighborhood level dynamics for residential properties, providing unrivaled pre-diligence capabilities and a parcel risk database for portfolio analysis. RealtyTrac's data is widely viewed as the industry standard and, as such, is relied upon by real estate professionals and service providers, marketers and financial institutions, as well as the Federal Reserve, U.S. Treasury Department, HUD, state housing and banking departments, investment funds and tens of millions of consumers. 

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