Home Mortgage Originations in U.S. Down to a 4-Year Low in Q2

According to ATTOM Data Solutions' Q2 2018 U.S. Residential Property Loan Origination Report, more than 1.5 million (1,527,433) loans secured by residential property (1 to 4 units) were originated in Q2 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.

U.S. Mortgage Market Highlights:

• 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.

• 272,852 Home Equity Lines of Credit (HELOCs) were originated on residential properties in Q2 2018, down 22 percent from the previous quarter and down 23 percent from a year ago

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.

"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," said Daren Blomquist, senior vice president at ATTOM Data Solutions. "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."

Markets with increasing loan originations

Only four of 173 metropolitan statistical areas analyzed in the report posted a year-over-year increase in loan originations, counter to the national trend: Hagerstown, Maryland (up 51 percent); Beaumont-Port Arthur, Texas (up 16 percent); Raleigh, North Carolina (up 13 percent); and Ocala, Florida (up 1 percent).

"In the current market environment of rising interest rates and lower loan volumes, it is more important than ever for mortgage lenders to seek out innovative ways to reduce costs, accelerate loan cycle times and provide a best-in-class consumer experience," said Paul Doman, president and CEO of Accurate Group, which provides appraisal management and title services to lenders. "The lenders who are faring the best in terms of efficiency and borrower satisfaction are those that have kept pace with and implemented new technologies across multiple facets of the loan process."

Nine of the 173 metro areas analyzed in the report posted a year-over-year increase in purchase loan originations, including Raleigh, North Carolina (up 2 percent); Palm Bay-Melbourne-Titusville, Florida (up 12 percent); Wichita, Kansas (up 9 percent); Lancaster, Pennsylvania (up 10 percent); and Amarillo, Texas (up 65 percent).

Sixteen of the 173 metro areas analyzed in the report posted a year-over-year increase in refinance originations, including Phoenix, Arizona (up 3 percent); Houston, Texas (up 28 percent); Orlando, Florida (up 3 percent); Raleigh, North Carolina (up 18 percent); and Boise, Idaho (up 14 percent).

Twenty-two of the 173 metro areas analyzed in the report posted a year-over-year increase in HELOCC originations, including Raleigh, North Carolina (up 32 percent); Hartford, Connecticut (up 35 percent); Providence, Rhode Island (up 4 percent); Colorado Springs, Colorado (up 17 percent); and Bridgeport, Connecticut (up 30 percent).

Median down payment increases to new record high

The median down payment on single family homes and condos purchased with financing in Q2 2018 was $19,900, up 19 percent from $16,750 in the previous quarter and up 18 percent from $16,925 in Q2 2017 to a new record high going back as far data is available -- Q1 2000.

The median down payment of $19,900 was 7.6 percent of the median sales price of the homes purchased with financing during the quarter, up from 6.6 percent in the previous quarter and up from 6.6 percent in Q2 2017 to the highest level since Q3 2003 -- a nearly 15-year high.

Among 103 metropolitan statistical areas analyzed for median down payments, those with the biggest median down payments for homes purchased in Q2 2018 were San Jose, California ($306,000); San Francisco, California ($220,000); Los Angeles, California ($130,000); Oxnard-Thousand Oaks-Ventura, California ($115,400); and Boulder, Colorado ($107,750).

Other metro areas with median down payments of $60,000 or higher in the second quarter were San Diego, California ($90,400); Boston, Massachusetts ($79,925); Seattle, Washington ($70,100); Fort Collins, Colorado ($68,050); Bridgeport, Connecticut ($63,550); New York, New York ($62,108); and Naples, Florida ($60,000).

Co-buyers account for 17.6 percent of all Q2 2018 home sales

Nationwide, 17.6 percent of all single family home purchases in Q2 2018 were to co-buyers (multiple, non-married buyers listed on the sales deed), up from 17.4 percent in the previous quarter.

The average down payment for homes purchased by co-buyers nationwide was $63,117, 51 percent higher than the average down payment of $41,749 for homes purchased by other homebuyers. The average co-buyer down payment represented 16.3 percent, more than double the average down payment percentage of 8.1 percent for other homebuyers.

Among 153 metropolitan statistical areas analyzed for co-buyer share, those with the highest percentage of co-buyers in Q2 2018 were San Jose, California (49.3 percent); San Francisco, California (39.1 percent); Honolulu, Hawaii (31.8 percent); Seattle, Washington (29.5 percent); and Miami, Florida (29.1 percent).

FHA loan share decreases to more than 10-year low

Residential loans backed by the Federal Housing Administration (FHA) accounted for 10.2 percent of all residential property loans originated in Q2 2018, down from 10.9 percent in the previous quarter and down from 13.5 percent a year ago to the lowest share since Q1 2008 -- a more than 10-year low.

Residential loans backed by the U.S. Department of Veterans Affairs (VA) accounted for 5.5 percent of all residential property loans originated in Q2 2018, down from 6.2 percent in the previous quarter and down from 6.4 percent a year ago.