Residential loan refinancing data
Residential loan refinancing data

Decreased Refis Cause Residential-Loan Originations to Drop

Carrie Rossenfeld Residential & Mixed Use

Irvine, California–based ATTOM Data Solutions reports that loans secured by residential property (one to four units) were down 20 percent in Q4 2017 from the previous quarter and down 19 percent from a year ago. The drop was led by a 34 percent decrease in refinance originations on a year-over-year basis.

The firm reports that the total number of loans for the quarter was 1,903,364, and 818,158 of these were refinance loans, down 17 percent from the previous quarter and down 34 percent from a year ago. A total of 791,637 of the residential loans originated in Q4 2017 were purchase loans, down 22 percent from the previous quarter and down 1 percent from a year ago. Also, 293,570 Home Equity Lines of Credit were originated on residential properties in Q4 2017, down 25 percent from a nine-year high in the previous quarter and down 7 percent from a year ago.

U.S. loan originations and interest rates. Chart courtesy of ATTOM Data Solutions.

U.S. loan originations and interest rates. Chart courtesy of ATTOM Data Solutions.

While purchase loans for the quarter dipped, year-over-year statistics remain strong. According to Daren Blomquist, SVP at ATTOM Data Solutions, “The falloff in refinance originations continued for the third straight quarter, but purchase originations held steady compared to a year ago despite ballooning down payment amounts that make it more difficult for first-time homebuyers to compete — as evidenced by the three-year low in the share of FHA buyers,” said. “And while the rise in construction loans in part reflects homeowners reconstructing in the wake of hurricane Harvey in southeast Texas, the widespread rise in construction loans in other parts of the country indicates that more homeowners are staying put and remodeling rather than trying to move up into another home that comes with a big down payment and probably a higher mortgage interest rate.”

One statistic that shows strength for the housing market is that construction loans are on the rise, ATTOM Data reports that a total of 29,357 construction loans backed by residential real estate were originated in Q4 2017, up 12 percent from the previous quarter and up 33 percent from a year ago to the highest level since Q3 2015 — a more-than-two-year high. Construction loans are those that finance improvements to real estate.

The loan origination report is derived from publicly recorded mortgages and deeds of trust collected by ATTOM Data Solutions in more than 1,700 counties accounting for more than 87 percent of the U.S. population. Counts and dollar volumes for the two most recent quarters are projected based on available data at the time of the report. For the full report, click here.

by Carrie Rossenfeld