Though mortgage originations were down overall in the first quarter, home equity lines of credit spiked on higher home prices, according to Attom Data Solutions.
Over 1.8 million loans secured by residential property were originated in the first quarter, a decline of 3% from a year ago and 5% from the previous quarter. HELOC origination volumes shot up 18% from just a quarter ago, and 14% from the same period last year.
While purchase loans saw a 16% quarterly decline in originations, they were still up 2% from 1Q17. Refinance loan originations fell to 799,939 in the first quarter, an 11% drop from a year ago and a 2% decrease from the previous quarter.
“Putting home equity to work is the name of the game in the 2018 housing market — both for current homeowners as well as homebuyers,” Daren Blomquist, senior vice president at Attom, said in a press release.
“With interest rates rising and home price appreciation accelerating, current homeowners are increasingly turning to home equity lines of credit rather than refinances to tap their home’s equity. And given that median down payments rose more than four times as fast as median home prices over the past year, it’s not surprising that homebuyers are increasingly getting help from co-buyers — often in exchange for a share of their home’s future equity,” he added.
Co-buyers, or multiple, non-married buyers listed on the sales deed, accounted for 17.4% of all single-family home purchases in the first quarter, according to Attom.
“It’s not surprising that in places like Seattle, the Bay Area and other challenging markets buyers are looking at ways to increase their purchasing power, and reduce the amount of debt they are taking on. The sharing, co-buying and co-owning of a home movement will only grow as more millennials and Gen Z enter the marketplace,” explained Michael Micheletti, director of corporate communications at Unison, a company providing homebuyers with down payment assistance in exchange for a share of any future increase in the house’s worth.