The State of Mortgage Lending and Servicing

What trends are impacting the landscape of lending and servicing in 2018? A new survey from the American Bankers Association seeks to provide insights into that topic, having polled 161 banks to assemble its data.

The ABA’s 25th Residential Real Estate Lending Survey culled data between February 14, 2018, to March 30, 2018, much of it incorporating year-end results from 2017. Sixty-five percent of the survey respondents were commercial banks and 35 percent were savings institutions. Approximately 73 percent of the institutions surveyed reported assets totaling less than $1 billion.

The survey reported that participant loan volume for 1-4 family mortgage loans averaged $80 million. In 2017, 1-4 family mortgage purchase loan originations made up 60 percent of year-to-year origination, according to the survey. For comparison’s sake, in 2016 the percentage was 53 percent, and 45 percent in 2015.

For home equity loans, the average participant loan volume was $6.3 million. (Reverse mortgage originations have been on the downswing in recent months.)

Seventy-one percent of the surveyed banks estimated servicing between 0-2,000 1-4 family loans in 2017. Twenty-one percent estimated servicing between 2,001-5,000 loans; five percent estimated their numbers between 5,001-10,000; and only three percent estimated servicing between 10,001-25,000 loans.

The breakdown between banks reporting that they retained servicing on their loans, released servicing to other entities, or did a mix of both came in with a roughly equal spread between the three categories. Thirty-four percent reported releasing servicing, 30 percent reported retaining servicing, and 36 percent reported doing a mix. Among those institutions doing both, respondents reported retaining servicing 58 percent of the time, compared with releasing servicing 42 percent of the time.

The survey found that 18 percent of originations were sold to conduits/wholesalers, up from 14 percent in 2016 and 22 percent in 2010. Fannie Mae received 11 percent of originations among banks surveyed, with nine percent headed to Freddie Mac.

The 30-year fixed-rate mortgage remained the dominant type of mortgage products offered, according to the survey, coming in at 52.8 percent (compared to 47.7 percent in 2016). Fixed-rate 15-year mortgages dropped from 18.6 percent in 2016 to 15.4 percent last year.

Also worth noting: the percentage of loans made to first-time homebuyers has been slowly but steadily increasing over the past four years. In 2014, it was at 14 percent; in 2018, it had increased to 17 percent.

To read the full ABA Residential Real Estate Lending Survey, click here.