Originations dropped to 4-year low in Q2

Home loan originations in the second quarter of 2018 totaled 1,527,433, down 16% from Q1 and 27% from a year earlier to a four year low.

New figures from ATTOM Data Solutions show that refinances and HELOCs saw the largest declines quarter-over-quarter (26% and 22% respectively) while purchase loans declined less than 1% from Q1.

However, on an annual basis, all three loan types saw double-digit declines: 28% for purchases, 27% for refinaces, and 23% for HELOCs.

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

The median down payment on single family homes and condos purchased with financing in Q2 2018 was $19,900, a new record high going back to Q1 2000, the earliest data available.

The median down payment was up 19% from $16,750 in Q1 and up 18% from $16,925 in Q2 2017 and represented 7.6% of the median sales price of the homes purchased with financing during the quarter, up from 6.6% in both the previous quarter and Q2 2017. It was the highest level since Q3 2003, a nearly 15-year high.

More buyers getting help
"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," added Blomquist.

Co-buyers made up 17.6% of all single-family home purchases in Q2, 2018 and their average down payment was 16.7%, more than double the average 8.1% of other homebuyers. 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.

Meanwhile, the share of buyers with FHA-backed loans fell to a more than 10-year low of 10.2%, down from 13.5% a year earlier.

VA loans also fell to 5.5% of all residential property loans originated in Q2 2018, down from 6.4% a year earlier.

Where originations were rising
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%); Beaumont-Port Arthur, Texas (up 16%); Raleigh, North Carolina (up 13%); and Ocala, Florida (up 1%).

"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."