Mortgage Daily

Published On: January 30, 2016

On loans used to finance a home purchase, lower-income and black borrowers saw their share rise. But a decline was noted on refinances.

Between 2014 and 2015, the number of
mortgages originated was up by 1.4 million units. That worked out to an increase of 22 percent.

On just mortgage refinances, production was up by 36 percent from 2014. Purchase financing loans saw a year-over-year rise of 13 percent.

The findings were reported Thursday by the
Federal Financial Institutions Examination Council based on data submitted as required by the Home Mortgage Disclosure Act.

In all, 6,913 financial institutions — including banks, savings associations, credit unions and mortgage companies  — submitted mortgage lending transaction data.
The number of reporting entities fell 2.5 percent from the prior year.

Last year’s activity was derived from data on 12.1 million loan applications, of which 7.4 million resulted in loan originations, and 2.1 million resulted in purchased loans.

Purchase-money mortgages on one-to-four family
properties that were made to low- and moderate-income borrowers accounted for 27 percent of 2015 originations, up from a 26 percent share the prior year.

Refinances share for low- and moderate-income borrowers retreated, though, to 22 percent from 24 percent in 2014.

Black borrowers made up 5.2 percent of last year’s purchase financing, more than 4.9 percent in 2014. But on refinances, black borrower share fell to 4.9 percent in 2015 from 5.2 percent.

Hispanic-white borrowers made up
7.9 percent of 2015’s purchase financing, more than the previous year’s 7.5 percent share. Hispanic’s share of the purchase market inched up to 6.1 percent from 6.0 percent the prior year.

The report indicated that purchase-money financing to Asian borrowers represented 5.5 percent of overall purchase transactions, less than 5.7 percent in 2014. Asian share of refinances, though, rose to 5.1 percent from 4.5 percent.

Government share of purchase financing — including
FHA, VA, RHS and FSA loans — expanded to 39 percent of first liens last year from 37 percent in 2014.

The HMDA data indicate that FHA share of the purchase market increased to 25 percent in 2015 from the prior year’s 21 percent.

“One reason for the rise in the FHA’s market share may have been that the FHA significantly reduced its annual mortgage insurance premiums by 0.5 percentage points in January 2015 for loans with terms greater than 15 years,” the report stated.

FHA loans made up 14 percent of last year’s total, more than 9 percent in 2014.

VA share of the purchase market was a 10th, no different than in 2014.
VA refinance share slipped to 9 percent in 2015 from 10 percent.

Higher priced loans — first liens with rates at least 150 basis points more than average prime offer rates and subordinate liens with rates at least 350 BPS more than APORs —
accounted for 6 percent of last year’s business, down from 8 percent in 2014.

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