New home mortgage lending totaled about $380 billion in the first quarter of 2016. Of that total, refinancings accounted for an estimated $195 billion (51.3%), while new loan originations totaled $185 billion. Refinancings rose by 11.4% quarter over quarter, with new loans tumbling by 11.9% for the same periods.
Freddie Mac and Fannie Mae have also reported that refinancings for the first five months of 2016 have contributed 55.6% to their total business.
The data were reported Thursday by Inside Mortgage Finance.
Data compiled by the Mortgage Bankers Association show a recent annual low of 39.8% of refinancings in 2014, rising to 46% in 2015. Refinancing reached an annual peak of 71.2% in 2012, when the annual average mortgage loan rate was 3.66%, according to data from Freddie Mac.
In November and December of 2012, the monthly average mortgage rate hit a low of 3.35% and the fourth quarter of 2012 refinancing accounted for nearly 76% of all loan originations.
The Mortgage Bankers Association expects $1.6 trillion in total mortgage originations in 2016, with around $970 billion (about 61%) coming from new purchases and $585 billion from refinancings.
Loans for new purchases are expected to continue rising in both 2017 and 2018, while refinancings decline. Refinancings are most popular when mortgage interest rates are low, and as the Federal Reserve marches along with increases to its policy rate, mortgage interest rates are also expected to rise. The combined total of new purchase loans and refinancings is expected to decline in the next two years from the impact of rising loan rates on refinancing totals.
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