Slideshow 8 mortgage facts revealed in the latest HMDA data

Published
  • May 08 2018, 10:48am EDT
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There were one million fewer mortgages originated in 2017 compared to 2016, according to new Home Mortgage Disclosure Act data released by the Federal Financial Institution Examination Council and Consumer Financial Protection Bureau.

The annual HMDA data is traditionally released in September for the previous year. But this year, the FFIEC and CFPB released "snapshot-level" data on 2017 originations to make the information available to the public sooner, and will update the data as needed later in the year.

The 2017 HMDA data tracked information on 12.1 million home loan applications, which resulted in 7.3 million loan originations, 2.1 million in purchased loans, and a total of over 14.1 million actions, according to the FFIEC. The data also includes information on about 481,000 preapproval requests for purchase mortgages.

Notably, for 2017, the volume of reporting institutions dropped 13% to 5,852 institutions compared to the previous year. This was most likely driven by changes to Regulation C, which altered guidelines on which depository institutions were required to report.

Also prevalent in the data were insights on borrowers of different racial backgrounds. Both purchase and refinance loans made to black borrowers grew in 2017, while refinance mortgages for Asian borrowers fell 1.5 percentage points. However, minorities saw greater denial rates overall for conventional home purchase loans.

By product type, the share of Federal Housing Administration loans for home purchases plummeted, part of an overall decline in the government-mortgage share of purchase volume.

From falling originations to market share shifts for nonbanks and government loans, here's a look at eight key findings from the new HMDA dataset.

Loan originations plummet

The volume of originated mortgage loans fell by more than 1 million between 2016 and 2017, marking a 12.4% annual drop. By loan type, refinance originations declined more than 33% while home purchase lending grew over 4%.

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Loans made to black borrowers grow

Home loans made to black borrowers increased from 6% to 6.4% over the course of 2017, while the share of loans made to Hispanic borrowers remained unchanged at 8.8%. Asian borrowers also saw their share of loans grow from 5.5% to 5.8%.

Refinance loans made to black borrowers grew from 5% to 6%, while those made to Hispanics increased from 6.2% to 6.8%. Asian borrowers saw refinance loans fall from 5.5% to 4%.

Minorities see greater denial rates

Black and Hispanic-white applicants saw greater denial rates for conventional home purchase loans than non-Hispanic white applicants. Asians also saw similar denial rates to non-Hispanic white applicants. These relationships are similar to findings of earlier years, according to the Federal Financial Institutions Examination Council.

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FHA purchase share slips 10%

The Federal Housing Administration had an approximate 10% decline in the total share of single-family purchase mortgages it insured, to 22.6% in 2017 from 25% in 2016. However, the FHA's share of refinance loans rose to 13.2% from 12% in 2016.

Government share of purchase mortgages also declines

Because of the decline in the FHA's purchase share, the overall share of government-guaranteed purchase mortgages fell to 36.3% in 2017, compared with 38.7% in 2016. The Veterans Affairs mortgage guarantee program maintained an approximate 10% market share last year from the year before.

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Low- and moderate-income borrowers see gains

The share of first-lien purchase mortgages made to low and moderate-income borrowers for one-to-four family, site-built, owner-occupied properties ticked up to 26.3% from 26.2%, while the share of refis made to these low to moderate-income borrowers shot up to 22.9% from 16.9%.

Independent mortgage bankers increase share

For the second consecutive year, independent mortgage bankers originated more than half of the purchase and refinance mortgages while continuing to take business away from depositories.

Independent mortgage bankers originated 56.1% of purchase loans, up from 53.3% in 2016, while their first-lien refinance volume increased to 55.8% from 52.2% in 2016. That was the first year in which independent mortgage companies made the majority of such loans since at least 1995.

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More higher-priced mortgages originated

Higher-priced loans, defined as those with annual percentage rates that exceed the average prime offer rates by at least 1.5 percentage points for first-lien loans and at least 3.5 percentage points for subordinate-lien loans increased to 6.9%, up from about 5.5% in 2016.