Mortgages are the key for millions of families trying to reach their dreams of owning a home and are often the most popular financial products sold by institutions. But when planning your company’s operations for the next few years, how do you make sure your products are attractive to your community and fit national trends?

Let’s quickly break down the latest batch of HMDA data and what it indicates for future home purchases.

Which Areas Are the Most Active?

The first and most important data to analyze is the distribution of approved home mortgages across the country. Examining originated mortgages to purchase principal residences, 1-4 unit properties, Texas has the largest share of originated mortgages, accounting for 8.7% of the national total, with California coming in second at 8.6%, and Florida in third at 7.6%.

While some may be surprised to see Texas ranking higher than the much more densely populated state of California, the housing market in Texas has seen a significant boom in the last few years. This influx has led to a 6.4% increase in home sales between Q3 2018 and Q3 2019, and a home price increase of 4.3%.

The State of Pre-Approvals

Pre-approvals have always been critical in ensuring that financial institutions enter into contracts with people they know can make consistent payments, but it seems the American population may not understand the wisdom of this process.

According to the HMDA data release, only 6.39% of originated mortgages for family home purchases went through the pre-approval process before the homebuyer searched for houses that would fit their budget. The vast majority of originated mortgages found houses first and then requested financing.

The Dominance of Fixed-Term Mortgages

Financial institutions often offer mortgages in one of two forms: adjustable rates that can rise or fall with the market rates, or fixed rates that provide an exact interest amount throughout the lifetime of the mortgage. According to HMDA data, fixed rates are the most popular product and make up 91.4% of originated mortgages for home purchases.

Using the filtering power available in LendingPatterns™ gives us a chance to see the  areas of the country where homebuyers are taking advantage of adjustable rate mortgages to finance their home purchase.  While the state of Texas edges out home purchase volume, it drops to number four in the ranking of states by preference for adjustable rate mortgages.  California tops this list.

Housing markets vary from state to state and it can be difficult to predict what kinds of mortgages your local communities are looking for, but by working with ComplianceTech, we can help you understand your demographics and serve them responsibly. Visit our website today and see how our software products can give your team the cutting edge in your local mortgage market.