Mortgage originations are expected to decrease by 30 percent in 2014, due to a decline in refinance activity, according to estimates from CoreLogic.
Every year, in mid-September, the Home Mortgage Disclosure Act (HMDA) data for the prior year of mortgage activity is released. This report provides lenders and policy makers with information about mortgage denial rates, borrower and applicant details, mortgage pricing, and the level of mortgage originations.
The most important figure within the HMDA report is the amount of first-lien mortgage originations. As the industry awaits these for these numbers to be released, CoreLogic produced a preview of the expected number of originations. The company's estimate is usually not too far off from the HMDA data.
CoreLogic recently reviewed its public records data to estimate mortgage originations in 2014. Using public records deed information, CoreLogic was able to determine if there was a mortgage related with a sale and the amount of the mortgage.
CoreLogic predicts that the number of mortgage originations fell by 30 percent from 2013 to 2014, while the mortgage origination dollar volume decreased by 27 percent.
On average, the CoreLogic estimate of mortgage origination volume is 1 percent below the HMDA estimate. Thus, the $1.28 trillion in mortgage origination dollar volume that CoreLogic forecast for the HMDA report is a minimum level. Most analysts estimate that lenders reporting under HMDA cover about 95 percent of the mortgage market, so CoreLogic estimates that total market originations accounting for under coverage is closer to $1.36 trillion.
"The decrease in mortgage originations in 2014 was due to a drop off in refinancing,"CoreLogic said.
The CoreLogic data determined that refinance origination counts fell by 49 percent and the dollar volume fell by 47 percent. The drop in refinancing was partially offset by an increase in purchase money originations, which increased by 5 percent and the dollar volume increased by 7 percent in 2014. Purchase mortgage originations were able to pull out a small increase in 2014 due to a decrease in the cash sales share and strong home price appreciation.