Purchase Loans Account for Nearly 75% of Q3 Mortgages

Purchase mortgage loan share gained 10 percentage points in the third quarter compared to last year as the last remnants of the refinance boom faded out.

According to a snapshot of mortgage trends released this week by Guaranteed Rate, purchase loans accounted for 73 percent of all mortgage volumes last quarter, up from 63 percent a year prior.

The increase came as refinancing numbers dropped off by more than a third annually—"indicative of the fact that the third quarter of 2013 was when the mortgage market began to account for higher interest rates," Guaranteed Rate said.

Refinance applications have yo-yoed in recent weeks, according to data from the Mortgage Bankers Association, even as mortgage interest rates have averaged below 4 percent. While purchase loan share has risen as a result, actual volumes remain low as entry-level homebuyers struggle with housing costs and mortgage restrictions.

Among mortgage products, the 30-year fixed-rate mortgage remained the most popular by a wide margin, comprising 75 percent of total loan volume, up a percentage point from the same period in 2013.

The 15-year fixed loan lost ground, declining to an 8 percent share compared to 12 percent last year.

Meanwhile, adjustable-rate products came in mixed, gaining popularity over the year at 13.2 percent share (compared to 10.7 percent last year) but tailing off from a share of 16 percent in Q2.

"[T]he continued, steady year-over-year increase in the share of the total volume indicates that home buyers are growing more and more comfortable with this option," Guaranteed Rate said.

In other findings, housing prices continued on an upward trend, with the median purchase price climbing 8.1 percent over the year and 2.2 percent over the quarter. Average real estate taxes and credit scores were both essentially flat.

Would-be homebuyers aren't the only group to have been driven off by rising prices. Guaranteed Rate also found that investment activity ticked down 1 percentage point over the year, "likely reflective of higher housing prices impacting deals available for real estate investors."