Why Home-Purchase Originations Are Down, Refis Up

Blomquist: “Non-banks like Quicken Loans are continuing to gain share, while the Wells Fargos and Bank of Americas and JPMorgans of the world are losing share when it comes to origination.”

IRVINE, CA—Rising interest rates are having a chilling effect on home purchases, but surprisingly are encouraging homeowners to refinance in order to lock in rates before they rise too high, ATTOM Data Solutions’ SVP Daren Blomquist tells GlobeSt.com. The firm recently released its Q4 2016 U.S. Residential Property Loan Origination Report, which showed that  refinance originations continued to post strong numbers compared to a year ago in the fourth quarter, even as purchase originations decreased on a year-over-year basis for the second consecutive quarter, according to Blomquist

“The increase in refinance originations is surprising given the rising interest rates in the fourth quarter, but many homeowners may have been trying to lock in still relatively low interest rates before those interest rates rose further,” says Blomquist. “On the other hand, rising interest rates did seem to have a chilling effect on homebuyers using financing, as evidenced not only by the drop in purchase loan originations. but also a corresponding rise in the share of cash buyers, drop in FHA-buyer share and a rise in the average-down-payment percentage in the fourth quarter compared to the previous quarter.”