More mortgage loans were originated in 2015, recent data released by the Federal Financial Institutions Examination Council (FFIEC) revealed. The 2015 data also found the share of government-backed purchase mortgages to have increased.
The latest housing data was based on the lending activity at 6,913 institutions covered by the Home Mortgage Disclosure Act (HMDA) as of 2015. “The HMDA data are the most comprehensive publicly available information on mortgage market activity,” the FFIEC’s press release on September 29 read.
The 2015 housing data covered 14.2 million loan-related actions, consisting of (a) 12.1 million applications for home loans, 7.4 million of which were originated, and (b) 2.1 million loans that were purchased. 531,000 requests to be pre-approved for home purchase loans were also considered.
Purchase, Refinance Loans in 2015
There was an increase in the number of loans of all types and purposes made between the period 2014 and 2015 by 1.4 million or 22%. Similarly, there was an increase in each of refinance loan originations by 36%, as well as home purchase lending activity by 13%.
This upward trend contrasts with a decline in the number of reporting institutions to 2.5%, which could be attributed to mergers and acquisitions. Institutions covered by the HMDA are banks, credit unions, mortgage companies, and savings associations.
Per Income, Ethnicity
More loans were made to borrowers with low-and-moderate-income in 2015, up by 27% from 26% in 2014. However, there were fewer refinance loans made to the same set of borrowers with 22% down by 2 percentage points from 2014’s 24%.
Between 2014 and 2015, home purchase and refinance mortgages made to borrowers based on ethnicity are as follows:
Of Government Mortgages
Government-backed home purchase loans that include FHA, VA, and USDA/RHS/FSA took a bigger market share in 2015 with 39% compared to 37% in 2014. Back in 2009, the government home purchase loans accounted for 54% of the mortgage market.
The purchase and refinance results of each government agency in 2015 vis-a-vis 2014 are set forth below.
FHA: The number of Federal Housing Administration-insured first-lien home purchase mortgages for one-to-four owner-occupied property types increased by 25% from 21%. This effectively reverses the downward trend that FHA has been experiencing since 2009. The increase is partly attributed to the FHA’s decision in January 2015 to reduce its annual MIP or mortgage insurance premium rates for mortgages whose terms exceed 15 years.
There were more first-lien refinance loans insured by the FHA that were made in 2015 with 14% compared to 9% in 2014.
VA: The share of home purchase loans guaranteed by the U.S. Department of Veterans Affairs remained at 10%. Its share of refinance loans also decreased to 9%.
In 2015, the number of first mortgages originated that were considered as higher-priced loans decreased to 6% compared to 8% in 2014.
“Higher-priced loans are defined as loans with annual percentage rates (APRs) that exceed the average prime offer rates (APORs) by at least 1.5 percentage points for first-lien loans and at least 3.5 percentage points for subordinate lien loans,” according to the FFIEC.
In the case of FHA, about 22% of its insured first mortgages considered higher-priced in 2015. However, this is a significant decrease from 2014’s 45% and could be attributed to the reduction of FHA MIP rates, as mentioned above, which cost of insurance is included in the calculation of APRs.
HMDA Data and FFIEC
The FFIEC is an interbody agency formed to develop and prescribe uniform reporting systems for certain financial institutions of the federal government. The agency is also authorized to publicly disseminate data that depository institutions are required to report under the Home Mortgage Disclosure Act of 1975.