Originations and Foreclosures Fell in Q4 2015
The fourth quarter of 2015 experienced a double decline in mortgage originations and foreclosures, according to a pair of new data reports.
RealtyTrac’s U.S. Residential Property Loan Origination Report found approximately 1.6 loans were originated on one-to-four-unit residential properties in the fourth quarter of 2015, a 14 percent tumble from the third quarter and only a small one percent uptick from a year earlier. RealtyTrac determined the quarterly drop was primarily due to 24 percent plummet in purchase originations, the greatest downward motion since the third quarter of 2010.
All 65 metropolitan statistical areas measured by RealtyTrac with at least 5,000 loan originations in the fourth quarter posted a quarterly decrease in purchase loan originations, while nearly half saw year-over-year declines in purchase originations. During the fourth quarter, purchase originations accounted for 38.8 percent of all originations, while refinance originations accounted for 42.8 percent. But refinance originations also took a fourth quarter hit, dropping seven percent from the previous quarter and rising only two percent from a year earlier. Home equity line of credit originations made up 18.5 percent of fourth quarter activity, dropping seven percent from the third quarter and rising seven percent year-over-year.
“The 24 percent drop in purchase originations in the fourth quarter of 2015 was well above the average 15 percent seasonal slump in the fourth quarter over the past 10 years,” said Daren Blomquist, vice president at RealtyTrac. “New mortgage rules implemented at the beginning of October likely contributed to the decrease, but weakness in some local economies could also be contributing to the decrease, most notably in oil producing markets such as Houston and Oklahoma City, both of which saw purchase originations decrease by double-digit percentages both quarterly and annually.”
Separately, the Mortgage Bankers Association’s new National Delinquency Survey determined that delinquency rate for mortgage loans on one-to-four-unit residential properties fell to a seasonally adjusted rate of 4.77 percent of all loans outstanding at the end of the fourth quarter of 2015, reaching its lowest level since the third quarter of 2006. The percentage of loans on which foreclosure actions were started during the fourth quarter was 0.36 percent, down two basis points from the previous quarter and down 10 basis points from one year ago. The fourth quarter foreclosure starts rate was at the lowest since the second quarter of 2003.
The serious delinquency rate ended the fourth quarter at 3.44 percent, a decrease of 13 basis points from the previous quarter and a considerable tumble of 108 basis points from last year. This was the lowest serious delinquency rate since the third quarter of 2007.
“The overall delinquency rate fell to pre-recession levels and at 4.8 percent, was lower than the historical average of 5.4 percent for the time period 1979 to 2015,” said Marina Walsh, MBA’s vice president of industry analysis. “The rate at which new foreclosures were started decreased to 0.36 percent, the lowest rate since 2003 and only one-fourth of the record high level during the worst of the foreclosure crisis in the third quarter of 2009.”