The New York City metropolitan statistical area is the biggest MSA in the country, with more than 20 million people residing there as of July 1, 2015, according to the Census Bureau. What does lending look like in this enormous MSA, as illuminated by 2014 Home Mortgage Disclosure Act data?
It is very easy to zero in on MSAs using LendingPatterns ™. Generating a report on the Big Apple’s MSA takes about ten seconds. Then it becomes clear that residents applied for a hefty $160 billion in mortgages during 2014 and were granted about 54 percent of that amount, almost $86 billion.
(By the way, that’s a higher approval percentage than the last sort we did, for the country’s biggest banks, so New Yorkers may be slightly better credit risks.)
Whites applied for 40 percent of the $160 billion, a slightly-to-significantly lower percentage than some of the recent sorts we have been doing. Minorities asked for 20 percent of that amount, almost half of that coming from Asians, while a third of volume was unknown as to racial origin.
A look at the percentages in the actually originated apps, though, shows a somewhat different look. More than half (52.1 percent) of mortgage dollars went to whites. About 20 percent went to minorities, but Asians got a slightly higher percentage of mortgage dollars awarded, at 10.5 percent.
What are some of the characteristics of this $85 billion in mortgages? I’m going to guess before looking at the report that most of it is conventional and conforming, FHA mortgages are higher than VA loans (the opposite of the last sort), relatively high income borrowers, and a relatively high amount of investors.
How did I do? Conventional (non-government) loans came in at 90 percent, check. FHA volume was quite a bit higher than VA, 8 percent to 1.8 percent. Check. Investor loans (non-owner occupied) came in at 12 percent. Check. Upper income borrowers made up 60 percent of mortgage dollars granted, more than three times the low, moderate and middle baskets together. Check.
Pretty good so far. But I was wrong on conforming. Jumbo mortgages take up the majority, at 58 percent. This is perhaps unsurprising considering the high cost of real estate in the region. Also, the conforming-jumbo inversion, where jumbos are priced lower than conforming loans, continues to persist, making jumbos an attractive choice.
In fact, the average first lien is in the jumbo range, at $435,000. (The conforming loan limit is at $417,000.) And even second liens are higher, at $202,000, than first liens elsewhere in the country. But there aren’t many of those, since first liens comprise more than 98 percent of volume.
Not surprisingly for an MSA with so many investors, multifamily comes up pretty strong in the Big Apple and environs, at 16.6 percent. Manufactured housing? Miniscule. Single-family gets the balance.
Half of all lending was not sold into the secondary market. Of the Fannie/Freddie/Ginnie troika, Fannie Mae had the largest percentage of loans sold, more than the other two combined.
Another surprising stat, perhaps, is the HOEPA/non-HOEPA split. Of $85 billion in originations, $85 billion is in non-HOEPA lending. HOEPA loans make up less than $3 million. That’s something to think about!
(Mark Fogarty is a journalist and analyst who has been covering the mortgage industry for more than 30 years.)