Co-Borrowers Account for 23% of 2Q Single-Family Purchase Loans

ATTOM Data Solutions, Irvine, Calif., reported nearly one-fourth of all purchase loans originated in the second quarter involved co-borrowers, up by nearly 3 percent from a year ago.

The company’s quarterly U.S. Residential Property Loan Origination Report said 2.033 million mortgage loans originated on U.S. residential properties (1-4 units) in the second quarter, up 27 percent from a three-year low in the previous quarter but still down 12 percent from a year ago.

The report said 22.8 percent of all purchase loan originations on single family homes in the second quarter involved co-borrowers–multiple, non-married borrowers listed on the mortgage or deed of trust–up from 21.3 percent in the previous quarter and up from 20.5 percent a year ago.

“Homebuyers are increasingly relying on co-borrowers to help with home purchases, particularly in high-priced markets where sizable down payments are necessary to compete,” said ATTOM Senior Vice President Daren Blomquist. “This rising trend in co-borrowing is helping to eke out increases in purchase loan originations despite affordability and supply constraints.”

Among 42 cities with at least 1,500 purchase loan originations on single-family homes in the second quarter, those with the highest share of co-borrowers were San Jose, Calif. (50.9 percent); Miami (45.2 percent); Seattle (39.1 percent); Los Angeles (31.1 percent); San Diego (29.4 percent); and Portland (28.8 percent).

Cities with the lowest share of co-borrowers in the second quarter were Memphis, Tenn. (10.3 percent); Mesa, Ariz. (12.5 percent); Oklahoma City, Okla. (14.2 percent); Gilbert, Ariz. (14.4 percent); and Henderson, Nev. (15.1 percent).

ATTOM reported the median down payment for single-family homes and condos purchased with financing in the second quarter rose to $18,850, 7.3 percent of the median price of the homes purchased. That 7.3 percent was up from 6.0 percent in the previous quarter and up from 5.9 percent a year ago to the highest level since Q3 2014.

Among 75 metropolitan statistical areas with at least 1,500 financed purchases of single family homes and condos in the second quarter, those with the highest median down payment percentage in the second quarter were San Jose (25.2 percent); San Francisco (22.3 percent); Los Angeles); Naples, Fla. (18.5 percent); and Oxnard-Thousand Oaks-Ventura, Calif. (17.4 percent).

“Across Southern California we are witnessing the prolonged effects of low listing inventory, creating greater competition among purchasers and transforming the methods of financing being utilized,” said Michael Mahon, president at First Team Real Estate, covering the Southern California market. “Higher competition among home purchasers, often times involved in multiple-offer situations, is hampering the abilities of potential borrowers to leverage low-down payment loans such as FHA and VA financing options. Borrowers with higher down payments or all cash represent less risk to a closed transaction and are therefore more appealing to sellers.”

Total dollar volume of loan originations in the second quarter, including purchase, refinance and HELOC originations , rose to nearly $509 billion, up 31 percent from the previous quarter but still down 12 percent from a year ago. Total dollar volume of purchase loan originations in the second quarter grew to $257 billion, up 67 percent from the previous quarter and up 7 percent from a year ago to the highest level since Q2 2007–a 10-year high.

Total dollar volume of refinance originations in the second quarter was more than $188 billion, up 1 percent from the previous quarter but still down 32 percent from a year ago. Total dollar volume of HELOC originations in the second quarter was nearly $64 billion, up 30 percent from the previous quarter but still down 1 percent from a year ago.

Among 104 metropolitan statistical areas analyzed in the report, those with the biggest year-over-year increase in the number of purchase loan originations in the second quarter were Fort Wayne, Ind. (up 38 percent); North Port-Sarasota-Bradenton, Fla. (up 25 percent); Indianapolis (up 24 percent); Des Moines, Iowa (up 22 percent); and Tampa, Fla. (up 21 percent). Flint, Mich., saw the biggest decrease (down 33 percent).