Mortgage originations rose 12.7 percent year over year and dipped a slight 1.5 percent month to month in June, indicating stability despite increases in interest rates, according to a monthly report from Lender Processing Services.
Through June, originations had their strongest 12-month period since 2007, to 784,000, LPS said.
Prepayment activity, which is historically a good indicator of mortgage refinances, is still largely driving origination volume, the company said.
“Prepayment speeds have been impacted by the sharp increase in mortgage interest rates we’ve seen over the last couple months. However, even with that increasing interest rate pressure, July’s monthly prepayment rates are still about where they were this time last year, when rates were at historic lows,” said LPS Data & Analytics Senior Vice President Herb Blecher in a statement.
“In fact, they are roughly at the same levels as the heights of the ‘mini refinance booms’ in 2010 — when interest rates were comparable to where they are today — and in 2009, when rates were even higher.
“Of course, as interest rates continue to climb, we can expect that both prepayments and associated originations will decline.”
The number of homes entering the foreclosure process fell 39 percent year over year in July, to 112,849. Year to date through July, foreclosure starts were down 17.2 percent to their lowest level since 2007. On an annual basis, delinquencies were down 8.8 percent and homes in the foreclosure process were down 30.8 percent.
“Overall, the data shows that the strong downward trend in delinquencies and foreclosures continues nationwide, with a decrease in foreclosure starts contributing to this improvement,” Blecher said.
“For the year to date, 2013 has produced the lowest level of foreclosure starts since 2007. Given that nearly 50 percent of these are repeat foreclosures means that the picture is even more positive than a surface reading of the numbers might suggest.”
Short sales made up 10 percent of distressed sales in the first six months of this year, down from 16 percent in 2012.