Loan originations rose between the first and second quarters of 2017 but still showed a year-over-year decrease for the quarter, according to ATTOM Data Solution’s 2017 U.S. Residential Property Loan Origination Report.
More than 2 million loans were originated on U.S. residential properties during the second quarter of 2017, up 27 percent from a three-year low in the previous quarter but down 12 percent from a year ago.
The report also found that an increasing number of loans during the second quarter involved co-borrowers. Nearly 23 percent of all purchase loan originations on single family homes in the second quarter of 2017 involved co-borrowers, up from 21.3 percent in the previous quarter and up from 20.5 percent in the second quarter of 2016.
“Homebuyers are increasingly relying on co-borrowers to help with home purchases, particularly in high-priced markets, where sizable downpayments are necessary to compete,” ATTOM Data Solutions Senior Vice President Daren Blomquist said in a release. “This rising trend in co-borrowing is helping to eke out increases in purchase loan originations despite affordability and supply constraints.”
According to ATTOM, the highest share of co-borrowers were in San Jose, Calif. (50.9 percent); Miami (45.2 percent); Seattle (39.1 percent); Los Angeles (31.1 percent); San Diego (29.4 percent); and Portland, Ore. (28.8 percent).
“Climbing home prices are forcing more and more borrowers to consider other options, such as leveraging a parent’s credit, in order to qualify to buy,” Windermere Real Estate Chief Economist Matthew Gardner said. “Given the ongoing concerns about the emergence of another housing bubble, it was encouraging to see that Seattle has the tenth highest average down payment in the U.S. at 14 percent. Such substantial down payments can act as a cushion in the unlikely event that home prices start to reverse the substantial gains that we’ve seen over the past several years.”
The cities with the lowest share of co-borrowers in the second quarter were Memphis, Tenn. (10.3 percent); Mesa, Ariz. (12.5 percent); Oklahoma City (14.2 percent); Gilbert, Ariz. (14.4 percent); and Henderson, Nev. (15.1 percent), ATTOM found.
During the second quarter, Federal Housing Administration loans accounted for 13.6 percent of all residential property loans, up from 13.3 percent in the previous quarter but down from 14.1 percent in the second quarter of 2016.
Department of Veterans Affairs (VA) loans accounted for 6.5 percent of all residential property loans during the second quarter, down from 6.6 percent in the previous quarter and down from 7.3 percent in the second quarter of 2016.
ATTOM said the total amount of loan originations in the second quarter was nearly $509 billion, up 31 percent from the previous quarter but down 12 percent from a year ago.
Purchase loans in the second quarter accounted for nearly $257 billion, up 67 percent from the previous quarter and up 7 percent from a year ago. Refinance originations in the second quarter generated more than $188 billion, up 1 percent from the previous quarter but down 32 percent from a year ago.
The report found that the largest increases in purchase loan originations during the second quarter were Fort Wayne, Ind.(up 38 percent); North Port-Sarasota-Bradenton, Fla. (up 25 percent); Indianapolis (up 24 percent); Des Moines, Iowa (up 22 percent); and Tampa, Fla. (up 21 percent).
The biggest year-over-year decreases in purchase originations were Flint, Mich. (down 33 percent); Raleigh, N.C. (down 32 percent); Charleston, S.C. (down 26 percent); Lexington, Ky. (down 23 percent); and Santa Rosa, Calif. (down 22 percent).