A Dive Into Industry And State-Level Mortgage Trends In 2013

Rising rates have stifled mortgage originations at the national level. But which states are bucking that trend?
Janet Lee

In 2013, more than half of the industry 53.2% originated at least one first mortgage. Despite the number of credit unions participating in mortgage lending, the industry’s $120.5 billion in total first mortgage originations for 2013 is a 2.8% decrease compared to 2012. What’s more, rising interest rates will likely contribute to a challenging environment for 2014.

National Trends

After several hints, the Federal Reserve tapered its quantitative easing efforts in December 2013. At the end of the year, the 10-year treasury yield exceeded 3%, marking a 1.3 percentage point increase within just eight months. As interest rates started to rise, the amount of loan originations decreased at credit unions nationwide. Fourth quarter first mortgage originations for the industry were 33% lower than the record level set two quarters ago. In fact, the $23.5 billion lent during fourth quarter 2013 is the lowest quarter for first mortgage originations since 2011.

Data for December 31, 2013, for all U.S. credit unions
Callahan Associates |

Source:Peer-to-Peer Analytics from Callahan Associates

Meanwhile, the industry reported $271.8 billion in outstanding first mortgage loans as of December 2013, an annual growth of 8.7%. Credit unions held 41.6% of their collective loan portfolio in first mortgages, up 30 basis points from a year ago. The decision to sell fewer first mortgage originations to the secondary market is one reason first mortgages are claiming a larger share of the portfolio compared to 2012. In 2013, credit unions sold $55.3 billion, or 45.9%, of their first mortgage originations. Conversely, in 2012, they sold 53.6%. This slowdown in secondary market sales is largely attributed to decreased refinancing amid rising interest rates.


Data for December 31, 2013, for all U.S. credit unions
Callahan Associates |

Source: Peer-to-Peer Analytics from Callahan Associates

State Trends

The booming economies and other regional factors of certain states have provided credit unions there the opportunity to buck industry trends. North Dakota best exemplifies this case.

North Dakota has captured the title of the nation’s fastest-growing state for the past four years. In 2012 alone, its economy grew 13.4%, according to the Bureau of Economic Analysis. North Dakota’s economy has benefited from a surge in oil production in the western part of the state, with mining contributing 3.26 percentage points to real GDP growth of 13.4% in 2012. This oil boom has attracted people across the nation and has had a ripple effect on other industries as well, such as transportation and manufacturing. The increase in population and rapid economic growth in North Dakota has also invigorated the state’s real estate market, where a growing number of new residents are looking for housing. This activity is reflected in fourth quarter call report data. Among all states, North Dakota ranked first in both growth in first mortgage originations and outstanding first mortgage loans, posting an annual increase of 62.5% and 20.9% at year-end 2013, respectively.

Some of the states in the South and West, which were hit particularly hard by the recession, have also fared well in 2013. For example, Georgia and Florida were among the top 20 states in first mortgage origination growth. California posted a 7.3% annual growth in outstanding first mortgage loans, which is comparable to the industry average of 8.7%. Overall, 15 states posted increases in first mortgage originations over the past year and 48 states reported an annual growth in outstanding first mortgage loans.

Data As of December 31, 2013
Callahan Associates | www.creditunions.com

State First Mortgage Origination Growth Total First Mortgage Origination
1 North Dakota 62.5% $433.7M
2 North Carolina 45.6% $4.2B
3 Texas 21.4% $5.1B
4 Virginia 14.7% $18.0B
5 Louisiana 10.7% $461.5M
6 Oregon 9.2% $1.9B
7 West Virginia 8.3% $181.1M
8 South Carolina 8.1% $660.0M
9 Ohio 6.5% $2.5B
10 Colorado 6.3% $2.9B
11 Delaware 4.6% $80.7M
12 Rhode Island 4.2% $854.2M
13 Hawaii 4.1% $570.0M
14 Michigan 1.2% $4.3M
15 Maine 0.9% $527.9M
16 Wyoming 0.4% $155.5M
17 Georgia -3.0% $1.1B
18 Idaho -3.0% $927.8M
19 Florida -3.6% $3.5B
20 Kentucky -4.3% $460.2M

Source: Peer-to-Peer Analytics from Callahan Associates

Data As of December 31, 2013
Callahan Associates | www.creditunions.com

State First Mortgages Outstanding Growth Total First Mortgages Outstanding
1 North Dakota 20.9% $745.9M
2 Iowa 18.3% $3.5B
3 Virginia 17.9% $30.6B
4 Wyoming 16.0% $358.4M
5 Rhone Island 15.8% $2.5B
6 Colorado 13.4% $4.4B
7 Texas 12.9% $14.4B
8 West Virginia 12.8% $631.0M
9 Vermont 12.7% $1.2B
10 South Dakota 12.6% $495.9M
11 Maine 12.2% $2.1B
12 Idaho 11.5% $1.3B
13 Delaware 11.3% $280.0M
14 Minnesota 11.3% $4.3B
15 Illinois 11.2% $9.3B
16 Utah 10.5% $3.4B
17 Nebraska 10.4% $772.8M
18 Ohio 10.3% $5.1B
19 Kentucky 9.9% $1.5B
20 Washington 9.9% $8.7B

Source: Source: Peer-to-Peer Analytics from Callahan Associates

Although first mortgage originations at credit unions nationwide declined amid changes in the economic environment, credit unions’mortgage lending activities continue to be an important part of their member value proposition.

April 7, 2014

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