ATTOM: Loan Originations Decrease 4% in 2Q Despite Stronger Purchase, HELOC Activity

ATTOM Data Solutions, Irvine, Calif., said lenders originated 1.9 million residential loans in the second quarter, up by 26 percent from the a two-year low in the previous quarter but down by 4 percent from a year ago.

Despite near record-low interest rates, the 4 percent year-over-year decrease in total originations resulted in part from a 12 percent year-over-year decrease in refinance originations, the second consecutive quarter with an annual decrease. Conversely, purchase originations increased by 1 percent from a year ago–the eighth consecutive quarter with an annual increase–and home equity line of credit originations increased by 5 percent from a year ago, the 17th consecutive quarter with an annual increase.

“Homeowners are increasingly tapping the home equity that many have built up during the last four years of rapidly rising home prices,” said Daren Blomquist, senior vice president with RealtyTrac, Irvine, Calif., of which ATTOM is the parent company. “Meanwhile those rapidly rising prices are also locking some non-cash buyers out of red-hot but high-priced markets, resulting in weaker purchase loan originations in places like Denver, San Francisco, Portland and Dallas. On the other hand, more affordable markets such as Cleveland, Kansas City and Boise are posting double-digit increases in purchase loan originations.”

The report said among 73 metropolitan statistical areas with a population of at least 500,000 and at least 5,000 total loan originations in the second quarter, larges year-over-year increases in HELOC originations included Dallas (36 percent); Birmingham, Ala., (30 percent); Phoenix (28 percent); Sacramento (27 percent); and Seattle (25 percent). Other markets among the top 10 Columbus, Ohio (25 percent); Provo-Orem, Utah (24 percent); Denver (24 percent); Orlando (24 percent); and Cleveland, Ohio (23 percent).

“The popularity of HELOCs compared to cash-out refinances is likely due to the fact that interest rates are traditionally lower for HELOCs,” said Matthew Gardner, chief economist with Windermere Real Estate, Seattle. “Additionally, if equity is withdrawn during a refinance, homeowners must begin paying back the funds immediately, whereas a HELOC allows you to use the funds as needed.”

Among metro areas analyzed, those with biggest year-over-year increases in purchase loan originations in the second quarter were Cleveland (31 percent); Kansas City (21 percent); Boise, Idaho (20 percent); Dayton, Ohio (17 percent); Rochester, N.Y. (15 percent); Columbia, S.C. (13 percent); Atlanta (13 percent); Milwaukee (12 percent); Deltona-Daytona Beach-Ormond Beach, Fla. (11 percent); and Colorado Springs (11 percent).

Metros with the biggest year-over-year decreases in purchase loan originations in the second quarter were Honolulu, Hawaii (down 16 percent); Denver (8 percent); Louisville, Ky. (7 percent); Houston (7 percent); and San Francisco (6 percent); Bakersfield, Calif. (6 percent); Portland, Ore. (5 percent); Oxnard-Thousand Oaks-Ventura, Calif. (5 percent); Dallas (5 percent); and Detroit (4 percent).

ATTOM said VA loans totaled 136,248 in the second quarter, up 35 percent from the first quarter and up 14 percent from a year ago to the highest level for any quarter included in the scope of the report going back to 2006. VA loans accounted for 8.7 percent of all purchase and refi originations in the second quarter, the highest share also going back to 2006.

FHA loans totaled 273,356 in the second quarter, up 29 percent from the previous quarter but down 17 percent from a year ago. FHA loans accounted for 17.5 percent of all purchase and refi loan originations in the second quarter, unchanged from the previous quarter but down from 19.9 percent from a year ago.