Bucking the Mortgage Trend
Did you know that despite a national decline in the purchase mortgage market in the U.S. by 19.5% in 2022, there were some states and MSAs that actually experienced an increase in purchase mortgage originations? That's right! In some smaller MSAs like McAllen-Edinburg-Mission, TX, purchase mortgage originations increased by a whopping three-digit year-over-year increase and three-digit increase since 2018, while the rest of the country saw a decline.
McAllen's booming purchase mortgage market is due to its proximity to the U.S. border with Mexico, an increase in migrant population, and overall better housing affordability. In addition, lenders are expanding their product pipelines to offer FHA loans. But among the top 10 MSAs by the number of purchase loans originated, we observe divergent stories. Some MSAs increased purchase mortgage originations, and some decreased. Here's the list of the top 10 MSAs by number of purchase mortgage originations for 1-4 unit homes, and their respective year-over-year change:
Top MSAs where purchase mortgage originations increased Y-o-Y (2021 to 2022)
- Houston-The Woodlands-Sugar Land, TX +131%
- Atlanta-Sandy Springs-Alpharetta, GA +117%
- Dallas-Fort Worth-Arlington, TX +79%
- Miami-Fort Lauderdale-Pompano Beach, FL +9.2%
- Phoenix-Mesa-Chandler, AZ +7.1%
Top MSAs where purchase mortgage originations decreased Y-o-Y (2021 to 2022)
- New York-Newark-Jersey City, NY-NJ-PA -5.3%
- Chicago-Naperville-Elgin, IL-IN-WI -8.2%
- Washington-Arlington-Alexandria, DC-VA-MD-WV -9.1%
- Philadelphia-Camden-Wilmington, PA-NJ-DE-MD -9.8%
- Los Angeles-Long Beach-Anaheim, CA -15.9%
So, what does this mean for mortgage lenders? It means that taking a location-focused approach to mortgage lending can pay off. By analyzing local market conditions and understanding the nuances of specific regions, lenders can identify areas where demand for mortgages is increasing and adjust their lending strategies accordingly.
By using Polygon Research's HMDAVision, a mortgage lender who wants to expand its operations in Texas, for example, can identify specific regions within the state where demand for mortgages is high and tailor its marketing and lending strategies accordingly. This can lead to higher origination volumes, better pricing power, and ultimately, increased profitability.
The impact of location on mortgage originations cannot be ignored. While the U.S. purchase mortgage market declined at a national level in 2022, there were some states and many MSAs where the purchase mortgage market actually increased. By taking a location-focused approach to mortgage lending and leveraging Polygon Research's interactive dashboards to understand local market conditions, lenders can make more informed decisions and capitalize on emerging trends.
