New data from the Mortgage Bankers Association (MBA) shows that mortgage applications for new homes increased in February from a year earlier, but a separate report shows that independent mortgage banks and mortgage subsidiaries of chartered banks saw their net gains on originations drop more than half in the fourth quarter after the implementation of the TILA-RESPA Integrated Disclosure (TRID) rule.
On the plus side, applications in February gained 24 percent from a year earlier, according to MBA’s Builder Application Survey.
“Mortgage applications to homebuilder affiliates increased across the board in our survey for February as continued low interest rates and fairly mild weather helped to kick off the spring buying season,” MBA Vice President of Research and Economics Lynn Fisher said in a news release.
Conventional loans dominated applications, making up 67.7 percent of all applications, with FHA loans at 18.7 percent. Based on data from the survey MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 544,000 units in February, up 9 percent from the previous month.
In MBA’s Quarterly Mortgage Bankers Performance Report, data found that independent mortgage banks and mortgage subsidiaries of chartered banks registered a net gain of $493 per loan, down 60 percent from the $1,238 net gain those banks made in the previous quarter. That difference came from increased production expenses.
“With the Know Before You Owe (TRID) rule going into effect last Oct. 3, and declining production volume compared to the third quarter of 2015, mortgage bankers saw their total loan production expenses climb to $7,747 per loan, from $7,080 per loan in the third quarter,” MBA Vice President of Industry Analysis Marina Walsh stated. “The fourth quarter marked the second highest level of production expenses per loan since the inception of our report in the third quarter of 2008. However, the average production volume per company was nearly double the first quarter of 2014, when production expenses reached a study-high of $8,025 per loan. The increase in total production expenses per loan in the fourth quarter of 2015 cannot be explained solely by volume fluctuations.”