Industry Trends: Mortgages (3Q19)

First mortgage origination growth tops 12% as refinancing opportunities fuel activity.

Following the Federal Reserve’s rate cuts earlier this year, the average rate for the 15-year and 30-year fixed mortgage decreased in the third quarter of 2019, according to Freddie Mac. The average rate for a 15-year fixed-rate mortgage dropped 12 basis points quarter-over-quarter to 3.12%. It dropped 19 basis points to 3.61% for the 30-year fixed.

Refinancings accounted for 38.0% of all mortgage originations in the third quarter of 2019, according to the Mortgage Bankers Association. That’s up from 29.1% in the second quarter and is a shift the MBA expects will continue. The group estimates refinancings will comprise a full 50.7% of mortgage originations in the fourth quarter.

Key Points

  • Credit unions wrapped up the third quarter with $52.8 billion in mortgage originations. This is the highest third quarter origination performance on record and a 39.7% increase from one year ago.
  • Aggregate first mortgage loan balances increased 7.2% year-over-year to $455.3 billion as of Sept. 30, 2019.
  • Through the first nine months of 2019, fixed-rate mortgages comprised 70.2% of all first mortgage originations. That’s an increase of 6.3 percentage points from the year prior.
  • For the first time in nine years, first mortgage delinquency increased in the third quarter. It was up 2 basis points annually to 0.55%. The historical low for first mortgage delinquency is 0.28%, which credit unions reported in 2006.

Click the tabs below to view graphs.

YTD 1ST MORTGAGE ORIGINATIONS & MARKET SHARE

YTD 1ST MORTGAGE ORIGINATIONS & MARKET SHARE

FOR U.S. CREDIT UNIONS | DATA AS OF 09.30.19
Callahan & Associates | CreditUnions.com

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First mortgage originations through the first nine months of the year were up 12.2% versus the same period last year.

YTD MORTGAGE ORIGINATIONS BY TYPE

YTD MORTGAGE ORIGINATIONS BY TYPE

FOR U.S. CREDIT UNIONS | DATA AS OF 09.30.19
Callahan & Associates | CreditUnions.com

image

The share of fixed-rate mortgages in the first mortgage origination portfolio increased 6.3 percentage points year-over-year to 70.2%.

AVERAGE 1ST MORTGAGE BALANCE

AVERAGE 1ST MORTGAGE BALANCE

FOR U.S. CREDIT UNIONS | DATA AS OF 09.30.19
Callahan & Associates | CreditUnions.com

image

Average first mortgage balances increased 3.6% year-over-year, from $151,000 to nearly $157,000.

The Bottom Line

Financial institutions have originated $605.0 billion in mortgage loans nationwide so far in 2019, according to the Mortgage Bankers Association. Credit unions alone have booked $119.8 billion in first mortgages through the end of the third quarter, a 12.2% year-over-year increase. Declining rates have prompted consumers to turn their attention to refinancing opportunities. The resulting surge in first mortgage originations at credit unions in the third quarter pushed the industry’s share of the mortgage market up to 8.4% and helped reverse the year-to-date decline in originations set during the first six months of the year.

This article appeared originally in Credit Union Strategy & Performance. Read More Today.

December 30, 2019

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