First Quarter Residential Loans Down 5%; HELOCs Up 18%

ATTOM Data Solutions, Irvine, Calif., reported a 5 percent decline in residential home loans in the first quarter, despite a sharp uptick in home equity lines of credit.

The company’s 1Q U.S. Residential Property Loan Origination Report said lenders originated 1.814 million loans secured by residential property (1 to 4 units), down by 5 percent from the fourth quarter and down by 3 percent from a year ago.

ATTOM reported 665,887 purchase residential loans originated the first quarter, down by 16 percent from the fourth quarter but up by 2 percent from a year ago. It reported 799,939 of refinance loans, down by 2 percent from the fourth quarter and down by 11 percent from a year ago.

However, the report noted 347,875 HELOC originations in the first quarter, up by 18 percent from the previous quarter and up by 14 percent from a year ago

“Putting home equity to work is the name of the game in the 2018 housing market–both for current homeowners as well as homebuyers,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “With interest rates rising and home price appreciation accelerating, current homeowners are increasingly turning to home equity lines of credit rather than refinances to tap their home’s equity. And given that median down payments rose more than four times as fast as median home prices over the past year, it’s not surprising that homebuyers are increasingly getting help from co-buyers – often in exchange for a share of their home’s future equity.”

Other report findings:

–17.4 percent of all single family home purchases in the first quarter were to co-buyers (multiple, non-married buyers listed on the sales deed), up from 16.3 percent from a year ago and up from 14.9 percent two years ago.

–The average down payment for homes purchased by co-buyers nationwide was $56,911, 46 percent higher than the average down payment of $38,915 for homes purchased by other homebuyers. The average co-buyer down payment represented 15.3 percent of the average sales price, 35 percent higher than the 11.4 percent for other homebuyers. Metro areas with the highest percentage of co-buyers were San Jose (48.3 percent); San Francisco (37.9 percent); Seattle (27.7 percent); Honolulu (27.7 percent); and Miami (27.6 percent).

–Metros with the biggest year-over-year increase in HELOC originations in the first quarter were Athens, Ga. (up 176 percent); Chattanooga, Tenn. (up 165 percent); Norwich, Conn. (up 99 percent); Kingsport, Tenn. (up 92 percent); and Atlantic City, N.J. (up 87 percent).

–The median down payment on single family homes and condos purchased with financing in first quarter was $16,750, down 4 percent from $17,500 in the previous quarter but still up 27 percent from $13,207 a year ago. The median down payment of $16,750 was 6.6 percent of the median sales price of the homes purchased with financing during the quarter, down from 6.9 percent in the previous quarter but still up from 5.5 percent from a year ago.

–Residential loans backed by FHA accounted for 10.9 percent of all residential property loans originated in the first quarter, down from 12.0 percent in the previous quarter and down from 13.3 percent a year ago to the lowest share since Q4 2011. Residential loans backed by the Department of Veterans Affairs accounted for 6.2 percent of all residential property loans originated in first quarter, down from 6.6 percent in the previous quarter and down from 6.6 percent a year ago.