Markets & Economy

Loan origination volume hits highest level in 2 years

Jump equates to a 23 percent increase from 2Q 2014

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Takeaways:

  • Total loan origination volume reached its highest level in two years.
  • More than 1.95 million loans, worth $540 billion, were created for single-family homes and condos during the second quarter of 2015.
  • This equates to a 23 percent increase in origination volume when compared to the second quarter of 2014. It also represents a 22 percent rise in loan activity from the first quarter of this year.

Total loan origination volume — a combination of purchase and refinance loans — reached its highest level in two years, as more than 1.95 million loans, worth $540 billion, were created for single-family homes and condos during the second quarter of 2015.

According to a RealtyTrac loan origination report, the 1.95 million figure equates to a 23 percent increase in origination volume when compared to the second quarter of 2014. It also represents a 22 percent rise in loan activity from the first quarter of this year.

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Seven of the top 12 metros that saw the largest increase in second-quarter loan originations were located in California:

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  • Oxnard (up 58 percent)
  • San Jose (up 50 percent)
  • Los Angeles (up 50 percent)
  • San Diego (up 49 percent)
  • San Francisco (47 percent)
  • Sacramento (up 46 percent)
  • Riverside (up 41 percent)

Other metros that saw the largest increases in loan activity included:

  • Birmingham, Alabama (up 197 percent)
  • Minneapolis (up 51 percent)
  • Richmond, Virginia (up 48 percent)
  • Denver (up 46 percent)
  • Seattle (up 39 percent)

Accounting for 56.7 percent of originations, refinance loan activity rose by 32 percent year over year. More than 1.2 million refinance loans started during the second quarter and represented nearly $307 billion.

Representing the remaining 43.3 percent of all originations, purchase loans were up 9 percent from a year ago. More than 1.9 million purchase loan originations accounted for nearly $234 billion.

Eight of the 11 metros that saw the largest rises in purchase loans originated are located in the South:

  • Birmingham, Alabama (up 190 percent)
  • Cape Coral, Florida (up 31 percent)
  • Augusta, Georgia (up 30 percent)
  • Tampa (up 30 percent)
  • Orlando (up 28 percent)
  • Sarasota, Florida (up 27 percent)
  • Atlanta (up 22 percent)
  • Miami (up 19 percent)

Others that saw noticeable improvement in purchase loan origination include Richmond, Virginia (up 30 percent); Minneapolis (up 29 percent); and Dayton, Ohio (up 24 percent).

Breaking it down further by loan type, there were more than 1.2 million conventional and jumbo loan originations in the second quarter — primarily the result of a 30 percent spike in conventional refi originations.

There were a total of 326,143 Federal Housing Administration (FHA) loan originations, which represents a 46 percent year-over-year rise. The volume of FHA loans equated to 16.7 percent of all originations.

There were a total of 118,807 Veterans Affairs (VA) loans originated in the second quarter, representing 6.1 percent of all loan originations. VA loan originations in the second quarter were up 39 percent from a year ago.

According to RealtyTrac, there were also a total of 118,807 home equity lines of credit (HELOCs) originated in the second quarter, representing 14.4 percent of all loan originations. The figure also equates to a 22 percent year-to-year rise in HELOC activity.

Email Erik Pisor.