It probably won’t shock any readers of HousingWire that 2016 was a good year for mortgages.
Driven by low interest rates, a wave of refinances pushed originations up to levels not seen in several years.
But just how good was 2016?
Estimates from various sources, like the Mortgage Bankers Association, placed mortgage originations just shy of $1.9 trillion for 2016, but the exact figure won’t be known until the government releases the 2016 Home Mortgage Disclosure Act data, which isn’t expected until some time next month.
But a new report from CoreLogic, which is drawn from public record data and tracks very closely to the HMDA data, shows that mortgage originations were actually much closer to $2 trillion in 2016 than the MBA and others projected.
HousingWire got an advanced look at CoreLogic’s data, and the report shows that there were $1.96 trillion in single-family, first-lien mortgage originations in 2016.
That makes 2016 the second best year for mortgage originations since 2006, with only 2012 providing more origination volume than last year.
In its report, CoreLogic notes that its view of origination volume was, on average, 2% below the HMDA estimate from 2006 through 2015.
As the report notes, considering that HMDA typically under-reports the total market originations because some lenders are not required to report HMDA data, CoreLogic estimates that total volume of mortgage originations for 2016 was about $2.1 trillion.
Overall, CoreLogic’s report shows that the dollar amount of all mortgages – that’s purchase and refinance combined – originated in 2016 was up 15% over 2015.
In terms of the number of mortgages originated, last year saw a 10% increase from 2015, to just shy of 8 million total mortgages originated.
As expected, CoreLogic’s report shows a jump in refinances in 2016, thanks to the year’s sustained low interest rates.
In fact, CoreLogic’s report showed that refinances accounted for just over half of mortgages originated in 2016.
Specifically, the report showed that refinances increased by 19% in 2016 over 2015, in terms of dollar amount. The number of refinance originations increased 13% year-over-year.
Purchase originations were up too, climbing by 11% in dollar amount and 7% in number.
While the jump in refinances was due to low interest rates, the increase in purchase originations was driven by an increase in home sales, a decrease in the share of homes purchased with all cash, and strong home price appreciation, CoreLogic’s report showed.
The report also shows that the share of first-lien mortgages insured by the Federal Housing Administration and the Department of Veterans Affairs held steady at 25% of the market in 2016.
CoreLogic’s report closes with a prediction about 2017 – this year won’t be as good for mortgages as last year was.
That’s already been seen in various reports, including the recent earnings reports from Wells Fargo, Citigroup, and JPMorgan Chase, all of which showed that mortgage originations are down in 2017.
Another recent report from Attom Data Solutions showed that the first quarter of 2017 saw the lowest number of refinance mortgages originated in 10 years.
“While there was a sizable increase in mortgage originations in 2016, increases in mortgage rates over the past year and the dwindling supply of mortgages with interest rates above the current market rate should cause a decrease in mortgage originations in 2017,” CoreLogic notes in its report.
CoreLogic states that based on its calculations, as of April 2017, only 10% of outstanding mortgage debt would have high enough mortgage rates to make refinancing a money-saving option.
And that means fewer originations in 2017.
