The 2016 Home Mortgage Disclosure Act data is out! Analyses of it from LendingPatterns™ will be available shortly, but in the meantime I am going to look at the Fed analysis that has just been released on last year’s lending.
The Fed report shows 2016 lending volume to be up 13 percent from 2015, to 8.4 million mortgages from 2015’s 7.4 million. That’s up a million loans, robust by any standard.
For some reason, the Fed’s initial HMDA report does not give mortgage volume by dollars, only by numbers. The dollar amount will be the first thing I look for in LendingPatterns™.
Continuing recent patterns, the purchase mortgage/refinancing split was fairly evenly in 2016. Four million borrowers chose purchase mortgages, while 3.8 million got funded for refis. And since there are only three categories, the balance in home improvement loans would be about 600,000.
Good and Bad News
There’s some good news for minority lending in the data, and some bad news for low- and moderate-income lending. Purchase lending to Blacks increased to six percent of the total compared to 5.5 percent in 2015, and the white Hispanic cohort showed a bump up from 8.3 percent of purchase loans to 8.8 percent.
But loans to the low-mod category decreased by two percent, the Fed analysis reports, to 26 percent from 28 percent.
Real estate values apparently continued to climb last year, with the average purchase mortgage increasing 3.2 percent to $257,000. What’s more, the average loan value was above the 2006 peak for all major racial/ethnic groups except for white Hispanics.
Non-depositories increased their share of 2016 volume to 53 percent of purchase loans, up from 50 percent the year before. These independent mortgage companies also rose to above half the market for refis, at 52 percent. That’s a nice bump up from 48 percent in 2015.
Fourteen Million Apps
The analysis, by Neil Bhutta, Steven Laufer and Daniel R. Ringo of the Fed’s Division of Research and Statistics, is forthcoming in the Federal Reserve Bulletin. The Federal Financial Institutions Examinations Council, which oversees HMDA data collection, is a unit of the Fed and other agencies.
In all 6,762 financial institutions reported about 14 million mortgage applications last year.
A drop in mortgages insured by the Federal Housing Administration has helped continue a decline in nonconventional (government assisted) volume since 2009.
According to the article, “One factor that appears to help explain the fluctuations in the FHA share concerns changes in the upfront and annual mortgage insurance premiums (MIPs) that the FHA charges borrowers.
“For example, between October 2010 and April 2013, the annual MIP for a typical home-purchase loan more than doubled, from 0.55 percent of the loan amount to 1.35 percent.
“Drops in the FHA’s market share have been observed each time the FHA has raised premiums. In January 2015, the annual MIP was reduced to 0.85 percent for most borrowers, and the FHA share of home-purchase loans subsequently increased.”
(Mark Fogarty is a journalist and analyst who has been covering the mortgage market for more than 40 years.)