Q1 Originations Tumble by 34 Percent

Mortgage originations dropped by 34 percent from the fourth quarter of 2016 to the first quarter of 2017, according to new data from Black Knight Financial Services (BKFS). This year’s first quarter saw a three percent annual growth, the slowest rate since the fourth quarter of 2013.

 

Black Knight also determined that the share of the median income necessary to make principal and interest payments on the median-priced home each month was near a post-recession high at 22.6 percent, while the 1.3 percent increase in home prices in March was the largest monthly increase in nearly four years. With 59 consecutive months of annual home price appreciation, Black Knight concluded that that despite recent interest rate softening, home affordability remains near a post-recession low.

 

The refinance side of the industry also saw more than a little tumult during the first three months of the year.

 

“As expected, the decline was most pronounced in the refinance market, which saw a 45 percent decline from Q4 2016 and were down 20 percent from last year,” said Black Knight Data & Analytics Executive Vice President Ben Graboske. “They also made up a smaller share of overall originations than in the past; just 45 percent of total first quarter originations were refinances versus 54 percent in the fourth quarter of 2016. Purchase originations were also down 21 percent from the fourth quarter of 2016, although the first quarter is historically the calendar-year low for such lending. Refinance lending among higher-credit-score borrowers, who have largely driven the refinance market these past several years, saw a quarterly decline of 50 percent … lower credit borrowers—those with credit scores below 700—only saw refinance volumes decrease by 24 percent.”

---