Two Irvine, California–based research firms report declines in two areas of the national housing sector: home-loan originations and mortgage delinquencies. This provides an interesting picture of the residential market.
According to a release from a representative of ATTOM Data Solutions, more than 1.5 million (1,527,433) loans secured by residential property (defined as between one and four units) were originated in the second quarter of 2018, down 16 percent from the previous quarter and down 27 percent from a year ago to the lowest level since Q1 2014, a more than four-year low, a report from the firm shows.
The report says reductions were seen in purchase loans, residential loans, and Home Equity Lines of Credit (HELOCs). According to the release, 662,713 of the residential loans originated in Q2 2018 were purchase loans, down less than 1 percent from the previous quarter and down 28 percent from a year ago; 591,868 of the residential loans originated in Q2 2018 were refinance loans, down 26 percent from the previous quarter and down 27 percent from a year ago; and 272,852 Home Equity Lines of Credit were originated on residential properties in Q2 2018, down 22 percent from the previous quarter and down 23 percent from a year ago.
Daren Blomquist, SVP at ATTOM Data Solutions, is quoted in the release as saying, “Rising mortgage rates are cooling mortgage demand across the board, with overall originations down to their lowest level since 2014 — the last time we saw more than six consecutive months with average 30-year fixed mortgage rates above 4 percent. Meanwhile, buyers are upping the ante when it comes to down payments, evidenced by the record-high median down payment for homes purchased in the quarter, and an increasing number of buyers are getting help from co-buyers.”
Another research firm had good news about national mortgage-delinquency statistics. According to a release from the firm on BusinessWire, CoreLogic reports that nationally, 4.3 percent of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure) in June 2018, representing a 0.3 percentage point decline in the overall delinquency rate compared with June 2017, when it was 4.6 percent.
The release also said that as of June 2018, the foreclosure inventory rate — which measures the share of mortgages in some stage of the foreclosure process — was 0.5 percent, down 0.2 percentage points from 0.7 percent in June 2017. The June 2018 foreclosure inventory rate was the lowest since September 2006, when it was also 0.5 percent and was the lowest for June since 2006.
Dr. Frank Nothaft, chief economist for CoreLogic, is quoted in the statement as saying, “A solid labor market enables more homeowners to remain current on their mortgage. The national unemployment rate in June 2018 was 4 percent, the lowest for June in 18 years. While this has helped reduce delinquencies nationally, delinquency rates in areas hit by wildfires, hurricanes or other natural disasters have jumped as families deal with financial disruption and tragedy. The loss of housing and displacement of families also tends to drive up local rents and reduce vacancies.”
The trend of declining delinquency continues from last month. As SoCal Real Estate reported in August, BusinessWire reported that the percentage of mortgages in some stage of delinquency declined slightly between May 2017 and May 2017, according to a report from CoreLogic. The research firm said that 4.2 percent of mortgages were in some stage of delinquency (defined as being 30 or more days past due, including foreclosures) this May vs. 4.5 percent in May 2017, a 0.3 percent decline.