Residential loans in the U.S. dropped 12% during the first quarter of the year from the last quarter of 2015, RealtyTrac said in a new report.

Some 1.4 million loans were originated during the first quarter of 2016 – down 8% from a year ago and the lowest number recorded since the first quarter of 2014.

The decrease was driven by a 20% year-over-year drop in loan refinances. That more than offset a 3% increase in purchase originations and 10% rise in home equity lines of credit.

“After a surprisingly strong 2015, the mortgage refi market started running out of steam in the first quarter of 2016 despite lower mortgage interest rates,” Daren Blomquist, senior vice president for RealtyTrac, said. “Meanwhile the purchase loan market continued the pattern of slow and steady growth that it has been following the past two years, and HELOC originations increased on a year-over-year basis for the 16th consecutive quarter, showing that borrowers are regaining both home value and the confidence needed to increasingly leverage their home equity.”

RealtyTrac's report was based on data from more than 950 counties which covers 80% of the U.S. population.

Among the largest metropolitan areas, those with the largest decreases in loan refinances were Cincinnati with a 35% drop, and Philadelphia and Milwaukee with 32% decreases. These areas were followed by Raleigh, N.C., and Salt Lake City.

Metropolitan areas with the largest year-over-year percentage increases in home equity loans were Dallas, up 35% and Louisville, Ky., up 28%, followed by Seattle, Sacramento, Calif., and Columbus, Ohio.

Areas with the largest increases in purchase originations included Baltimore with an increase of 26% and Tucson, Ariz., with 18%, followed by Louisville, Ky., Minneapolis-St. Paul and Nashville, Tenn.

While the number of originations decreased, the estimated dollar amount of originations reached an estimated $444 billion during the first quarter of the year – up 5% from the previous quarter and up 5% up from a year ago.

The total dollar amount of purchase loans reached $146 billion – down 11% from the previous quarter but up 8% from a year ago.

The total dollar amount of purchase loans originated in the first quarter was an estimated $146 billion, down 11% from the previous quarter but up 8% from a year ago.

Among all purchase and refinance loans, 17.5% were FHA loans, 8.3% were VA loans, 0.8% were construction loans and the remaining 73.4% were other types of loans.

Instant Insights /

Residential Loans Drop 12% in Q1: RealtyTrac

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