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Loan volumes fall in first quarter with steep drop in refinancing

Origination numbers were down this past quarter in the nation’s most popular loan types following a big drop in refinancing activity.

The number of loans purchased by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac in the January-through-March period declined by 8.6 percent and 11.3 percent, respectively, according to their reports.

Fannie count Q1 '16Loan volumes also fell by 9.7 percent for Fannie and 13.7 percent for Freddie. The first-quarter numbers were much stronger than weak 2014 figures, however.  

Freddie counts Q1 '16The decline was driven by a sharp drop in refinancing that was only partially made up for by increases in home-purchase activity, the GSEs reported.

Fannie volume Q1 '16For example, Fannie reported a 20 percent decline in the number of refinance loans it purchased in the past first quarter compared to the first quarter of 2015.  

 Freddie Mac Q1 '16Freddie reported that the dollar volume of refinance-loan purchases was down by 27 percent in the past first quarter compared to the same quarter a year ago.

Government programs also decline

This same down trend was seen in the overall mortgage market, RealtyTrac reported on Thursday. 

“After a surprisingly strong 2015, the mortgage refi market started running out of steam in the first quarter of 2016 despite lower mortgage interest rates,” said Daren Blomquist, senior vice president at RealtyTrac.

The company has evaluated publicly recorded mortgages and deeds of trust in more than 950 U.S. counties. This captures loan data from the GSEs and government-loan programs, such as the Federal Housing Administration (FHA), Veterans Affairs (VA) and the United States Department of Agriculture (USDA).

Overall loan counts for the GSE and government programs in this past first quarter totaled 1.4 million, which was down 8 percent from the same quarter in 2015, RealtyTrac found. The company said refinancing counts dropped by 20 percent for the quarter.

In the report, however, Blomquist noted that home-purchase activity was increasing steadily. More Americans also have taken out home equity lines of credit (HELOCs) driven by rising home prices, he said.

In conference calls with reporters last week, Fannie CEO Tim Mayopoulos and Freddie CEO Donald Layton did not comment extensively on market conditions. Layton noted, however, that that Freddie-purchased loans from first-time buyers hit a 10-year high in the first quarter of this year.

GSE analysts have generally been positive about the housing-market outlook, and most forecasters have predicted that the home-purchase side of the mortgage business will dominate by the end of the year. In recent commentary, however, Freddie analysts boosted their projections for refinancing activity in 2016, noting that mortgage rates have fallen to three-year lows.    


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