Guaranteed Rate Releases Fourth-Quarter and Full Year 2014 Mortgage Trend Summary
Guaranteed Rate, one of the ten largest retail mortgage lenders in the nation, released a summary of mortgage trend snapshots for the U.S. from its database of home loans as of the end of the fourth quarter of 2014:
- Purchase loan volume took the lion’s share of the mortgage market nationally in 2014, accounting for 71% of the year’s total loan volume, compared to 51% for all of 2013– showing that refinances dropped steadily throughout 2014 to account for just 29% of total loan volume (down from 49% in 2013), before rebounding in the fourth quarter. A dip in mortgage rates in the fourth quarter of 2014 led to a jump in refinancing, with refis making up 39% of total loan volume compared to 27% for the third quarter.
- Adjustable rate mortgages (ARMs) rose strongly year over year, making up 14% of all loan volume in 2014 versus just 9% of all loans for the full year of 2013, continuing a trend of home buyers choosing this option more frequently than they did during the wake of the financial crisis.
- The 30-year fixed mortgage again remained far and away the most popular loan product, holding steady at 73% of total loan volume for the full year of 2014, the same as in 2013. However, 15-year fixed loans dropped in popularity with homeowners, from more than 13% of overall loan volume for all of 2013 to just 9% of total loan volume in 2014.
- Investment activity ticked down 1.5 percentage points in all of 2014 compared to the full year of 2013, likely reflective of higher housing prices and lower inventory levels impacting deals available for real estate investors.
- Average real estate taxes and credit scores were little changed in 2014 compared to 2013, both decreasing by less than 1%.
Some other local mortgage trends captured in the Guaranteed Rate data:
- In Chicago, purchase volume rose to 72% of overall loan volume for the full year of 2014 from 52% in 2013. ARMs rose from 11% of overall loan volume for 2013 to more than 16% of overall volume for the full year of 2014. The average real estate taxes paid dropped 5% year over year.
- In the New York City metro area, purchase volume rose from 49% of overall loan volume in all of 2013 to 71% for the full year of 2014. ARMs jumped in 2014 as well, accounting for 24% of all loan volume for the year, compared to just 16% of total loan volume for 2013. 30-year fixed rate mortgages ticked down to 67% of total loan volume for 2014 versus 69% for all of 2013, and the 15-year fixed loan tumbled to 7% of total volume in 2014, down from 12% of total volume for the full year of 2013.
- In Southern California (which includes both Los Angeles and San Diego), purchase volume was 54% of all loan activity in in 2014, up from just 43% of total loan volume in 2013. Refinancing remained stronger in this region than other parts of the country, accounting for 46% of all loan volume for 2014. 30-year fixed loan volume dropped year over year from 78% of all loans for the full year of 2013 to 68% of all loans in 2014, while ARMs more than doubled in the region, rising from 10% of all loan volume for 2013 to 23% for the full year of 2014.
- In Boston, purchase volume rose to 71% of all loan volume in 2014, up from 48% of total volume for the full year of 2013. Refinancing also bounced back in the fourth quarter in this region, rising 15 percentage points of overall volume versus the third quarter of 2014. ARMs steadily increased year over year, from 12% of all loans in 2013 to 19% of total loan volume in 2014. Volume from 30-year fixed loans ticked up from 69% to 71% of total volume year over year, while 15-year fixed loan volume dropped six percentage points in 2014.
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