Originations Up 10% in Q2, Trends Show Stronger Recovery

Second-quarter origination volume (in dollars) increased 9.6 percent over the same time last year as purchase loans started to make meaningful contributions to the housing recovery, ""Experian"":http://www.experian.com/ reported in its quarterly analysis of real estate trends.

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According to Experian's report, origination volume climbed to $478 billion, $42 billion more than Q2 last year. Compared to the first quarter of this year, Q2 volume disappointed, dropping from $515 billion.

What was more notable to Experian, however, was how origination activity was split: As refinance volume tumbled, purchase volume stepped in to make up some of the difference.

""The key statistic in the real-estate market is the change in the ratios of refinances versus home purchases, with purchases making up a much greater proportion of the total origination volume,"" said Alan Ikemura, senior product manager and business consultant at Experian Decision Analytics. ""The data from our IntelliView product indicates that despite a 7 percent decrease from the [COLUMN_BREAK]

previous quarter in refinancing activity, home purchases grew by 20 percent year over year and 29 percent quarter over quarter, and this is where we can begin to see some of the real-estate recovery taking place.""

The ""latest data"":https://themreport.com/articles/purchase-loan-share-surges-in-august-time-to-close-shortens-2013-09-18 from mortgage technology firm Ellie Mae suggests the share of purchase loans reached 57 percent in August, the highest level on record for the company.

At the same time, Experian continues to observe an increase in conventional existing-home sales (up 32 percent in the past year) while distressed property sales decline. Combined with strong yearly growth in new home sales--38 percent--the company says ""it is easy to see that the recovery could be coming from purchases.""

Adding to the positive news is the explosion of home equity lines of credit (HELOC) in the second quarter. According to Experian, HELOCs jumped more than 30 percent quarter-over-quarter and year-over-year, bucking its slow growth trend since 2010.

""We continue to see a very conservative lending approach, with nearly 90 percent of HELOCs still coming from super-prime and prime consumers,"" Ikemura said. ""However, there is an opportunity for more people to actually participate in getting a home-equity line because of home price improvements. This trend is likely to continue as we see more homeowners move into a better equity position.""

In terms of price appreciation and origination volume, the top-performing metro areas in Q2 were Las Vegas, Nevada (where origination gains topped 70 percent year-over-year); Phoenix, Arizona; and Atlanta, Georgia; those three cities ranked in the top five for both categories. They were followed by Miami and Tampa, Florida (in the top five for originations) and San Francisco and Los Angeles, California (in the top five for price gains).