Morning Briefing: First quarter mortgage volume increased says Equifax

by Steve Randall15 Jul 2016
First quarter mortgage volume increased says Equifax
The first three months of 2016 saw higher mortgage volume than the opening quarter of previous years according to data from Equifax.

The credit agency’s report shows an increase in first mortgages of 1.86 million, up 10.3 per cent; HELOCs increased 10.2 per cent to 314,400; and home equity instalment loans rose 23.5 per cent to 182,400 – an 8 year high for an opening quarter.

The share of borrowers with sub-prime credit scores (Equifax score of 620 or lower) was consistent with the past three years as a share of total lending (around 5 per cent.)

"The first quarter of 2016 was a strong one for mortgage lending and underwriting practices appear to have maintained their rigor over the last three years." said Amy Crews Cutts, chief economist for Equifax.  "We anticipate that the second quarter of 2016 will maintain this trend. And later this year, the much-anticipated addition of trended credit data to the mortgage underwriting process will help to strengthen the marketplace further by helping to statistically separate lower risk borrowers from those presenting higher risk."
New home loan apps down in June
There was a 0.2 per cent dip in applications for new home loans in June compared to May.

The Mortgage Bankers’ Association says that conventional loans composed 67.7 per cent of loan applications, FHA loans 18.2 percent, RHS/USDA loans 0.7 percent and VA loans 13.4 percent. The average loan size of new homes decreased from $328,032 in May to $326,175 in June.

"Thus far in 2016, average loan sizes for new homes have been higher than for the same period in 2015, but that gap has recently been declining," said Lynn Fisher, MBA's Vice President of Research and Economics. "The three-month moving average loan size was $326,480 in June relative to a series high of $329,119 in February and just over 2 percent higher than June a year ago. On a year over year basis, our June estimate of 530,000 new home sales was up 7 per cent."
Median home price hits new high in Houston
Houston home prices continue to rise despite realtors reporting rising inventory and flat sales.

The single-family home median price increased 2.5 per cent to a record high of $230,538 while the average price declined 0.8 percent to $300,178, the second highest level of all time (the highest was $302,599 in June 2015).

"We continued to see solid buying activity among middle-range housing in June,” said HAR Chairman Mario Arriaga with First Group. “Even though sales overall leveled off compared to last June, volume is up for the year, and we anticipate a sufficient supply of inventory and low interest rates to draw more home buyers into the market in the weeks ahead."

Sales were unchanged from June 2015 with 7,696 homes sold through the MLS of Houston Association of Realtors although year-to-date sales were up 2.7 per cent compared to the same period of 2015. Inventory rose to 3.7 months of supply from 3.2 months.


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