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Analysis of the 2017 HMDA Data

May 15, 2018 by Brian Arnesen

On May 8th, 2018, the CFPB made the 2017 HMDA snapshot data publicly available — nearly three months earlier than prior years. More than 5,800 institutions submitted HMDA data to the CFPB.

HMDA data provides the greatest insight into the U.S. mortgage industry and is a good barometer of the economy as a whole. Every institution should be analyzing their data and comparing it to their peers.

According to the 2017 HMDA data, the number of reporting institutions declined by 13% from 2016 to 5,852. Part of the reason less institutions reported HMDA data was the increase of the reporting threshold made to Regulation C.

In 2017, there were 12.1 million home loan applications, which resulted in 7.3 million loan originations, and 2.1 million in purchased loans. 

HMDA Loan Originations

The total number of originated loans decreased by 1 million between 2016 and 2017, which is a 12.4% drop. Refinance originations had a larger decrease of 33%. On the upside, home purchase lending increased by more than 4%.  

HMDA home purchase loans

First-lien home purchase loans for 1–4 family, site-built, owner-occupied properties made to LMI borrowers rose negligibly from 26.2% to 26.3%, and the share of refinance loans to LMI borrowers increased from 16.9% to 22.9%

Home purchase loans to black borrowers increased from 6.0% to 6.4% in 2017, and loans to Asian borrowers had a slight change from 5.5% to 5.8%.

Denial rates were consistent with previous years, with black and Hispanic-white applicants experiencing higher denial rates for conventional home purchase loans than non-Hispanic white applicants.

The FHA-insured share of first-lien home purchase loans for 1–4 family, site-built owner-occupied properties declined from 25% to 22.6% in 2017. The VA-guaranteed share of such loans remained consistent with previous years.

Majority of home loans

For the first time since 1995, independent mortgage companies originated the majority of loans. In the past, banks originated the majority of loans. This year, independent mortgage companies accounted for 56.1% of first-lien owner-occupied home-purchase loans. Independent mortgage companies also originated 55.8% of first-lien owner-occupied refinance loans, an increase from 52.2% in 2016

The data on the incidence of higher-priced lending showed that 6.9% of first-lien loans originated in 2017 have APRs that exceeded the loan price reporting thresholds, up slightly from 5.5% in 2016.

Overall, there were not many surprises this year. You can download the 2017 HMDA datasets here. The 2017 HMDA data reflects the changes in the mortgage market, especially as more banks exit the arena. With increasing interest rates, next year’s HMDA data is sure to look vastly different.

Now is a great time to start developing new product strategies and marketing campaigns. Use Market Data from QuestSoft to accurately evaluate your bank’s performance and compare it with your peers to leverage insights into business opportunities.