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Refis Up, Purchase Originations Down

Purchases may be on the decline, but it seems refinances are bucking the trend. According to ATTOM Data Solutions’ Residential Property Loan Origination Report, refinance originations were up 20 percent in Q4 2016—totaling 883,836 and $246 billion. This is up 27 percent over the year.

The top metro areas for refis were all on the West Coast: Olympia, Washington (up 108 percent); Spokane, Washington (77 percent); Boulder, Colorado (74 percent); San Diego (73 percent); and Eugene, Oregon (72 percent).

A possible explanation for the sudden jump? According to Darn Blomquist, Senior Vice President at ATTOM, it could be buyers anticipating further rate hikes in the months to come.

“The increase in refinance originations is surprising giving the rising interest rates in the fourth quarter,” Blomquist said, “but many homeowners may have been trying to lock in still relatively low interest rates before those interest rates rose further.”

The already rising rates did seem to have an impact on overall purchase loan originations, though. Those totaled 595,000 in Q4, down 26 percent from Q3 and 12 percent from one year prior. For the year, purchase loans were down 1 percent from 2015. The biggest drops were seen in Naples, Florida (down 23 percent); Austin, Texas (20 percent); and Fort Collins, Colorado (19 percent).

“On the other hand, rising interest rates did seem to have a chilling effect on homebuyers using financing,” Blomquist said, “as evidenced not only by the drop in purchase loan originations but also a corresponding rise in the share of cash buyers, drop in FHA buyer share, and a rise in the average down payment percentage in the fourth quarter compared to the previous quarter.”

Purchase originations are declining for big banks, too. Wells Fargo saw a 5 percent decrease and JPMorgan Chase a 15-percent one. The top purchase loan originators for Q4 were Quicken Loans and Caliber Home Loans.

Data for ATTOM’s Loan Origination Report is pulled from publicly recorded mortgage and deeds of trust across 950 counties in the U.S. To view the full report, visit RealtyTrac.com.

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