MReport December 2019

TheMReport — News and strategies for the evolving mortgage marketplace.

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34 | M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION Brokers' Share of the Market Rebounding Mortgages originated by brokers rose to 16% in 2019. C oreLogic reports that the mortgage brokers' share of conventional conform- ing mortgages rose to 16% in 2019, which more than doubled what it was from its low of 7% in 2011. "The loan-quality reputation of the broker channel had fallen during and immediately after the Great Recession as foreclosure rates jumped, leading some lenders to stop offering credit through bro- kers," CoreLogic said. "The broker market share started to decline after 2008, but has gradually rebounded in the last couple of years, and those loans are performing much better than the pre-crash loans." The share of mortgages from mortgage brokers peaked at more than 30% in 2007 before the Great Recession, and a year later fell to around 10%. Anthony Casa, Chairman of the Association of Independent Mortgage Experts (AIME) told MReport earlier this year that brokers are seeing a renewed life in housing. "For the second year in a row, mortgage brokers are better," Casa said. "One out of three millennial homebuyers now partner with a mortgage broker to help them fi- nance their first home. Millennials are doing more research and find- ing mortgage brokers provide more savings, personalized service, and no fees."\ Casa said millennial homebuy- ers will push brokers into the fourth-largest lending force, by volume, by early 2020. "More than 70 million millenni- als still do not own a home and are using brokers to help them find the best deal on a loan," Casa said. "The big reason why that's hap- pening is, the starter home price is fairly high, and many millen- nials are coming into the market and not able to find a property in their price range that they really desire, coming out of their rent- als," Casa said. He added that working with independent brokers creates an opportunity to help first-time buy- ers get the property the want, or the ability to borrow at lower in- terest rates, as brokers can deliver "at least a half a percent lower" than most banks and lenders. "Utilizing brokers for millen- nial buyers can also help them get into the home they want without paying the traditional 20% down payment," Casa said, adding that the average down payment for a millennial homebuyer over the past two years has been about 5%. Mortgage Loans Spike During Q2 Refinances led the charge, as originations grew 12% during the quarter. T ransUnion's Q 3 2019 Industry Insight Report says mortgage origina- tions were buoyed by refinances, as originations during Q2 2019 grew 12% annually to 2.1 million. The average new account balance grew during the quarter by 10% year-over-year. "It's noteworthy that many of the more expensive MSAs experienced significant year-over- year origination growth in Q2. Of the top 20 MSAs, those with an average new account bal- ance greater than $300K expe- rienced origination growth of 20% year-over-year, while those MSAs with an average new account balance less than $300K experienced origination growth of only 13% year-over-year," said Joe Mellman, SVP and Mortgage Business Leader at TransUnion. "Looking forward, we expect refinance activity to drive origi- nation growth, riding the avail- ability of low-interest rates." The number of mortgage loans grew annually from 53.1 mil- lion to 56.1 million in Q2 2019. The average debt-per-borrower rose year-over-year from $205,782 last year to $210,457 during the quarter. Origination during the quarter, when compared to Q2 2018, rose to 2.1 million from 1.9 million. Originations have held steady at 1.9 million and 2 million for the past Q2s of 2017 and 2016, respectively. Supporting TransUnion's research is the Mortgage Bankers Association, who reported week- ly mortgage applications rose 9.6% from the week prior for the week ending on November 8. The refinance index rose 13% from the previous week and was 188% higher than the same week in 2018. Also seeing an increase was the purchase index, which rose 5% from the prior week and 15% year-over-year. "Mortgage applications in- creased to their highest level in over a month, as both purchase and refinance activity rose de- spite another climb in mortgage rates. Positive data on consumer sentiment, and growing opti- mism surrounding the U.S. and China trade dispute were behind last week's rise in the 30-year fixed mortgage rate to 4.03%," said Joel Kan, AVP of Economic and Industry Forecasting. "Refinance applications jumped 13% to the highest level in five weeks, as conventional, FHA, and VA refinances all posted weekly gains. With rates still in the 4 percent range, we con- tinue to expect to see moderate growth in refinance activity in the final weeks of 2020." Refinances accounted for 61.9% of all mortgage activity during the week, which is an increase from the prior week's 59.5%.

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