The Qualified Mortgage (QM) Rule went into effect January 10, 2014, and appears to have impacted lending practices by parsing out some potential applicants who had reduced chances of approval under QM before they even submitted an application. This could explain that while all purchase applications were reduced in volume, the origination rates were higher. The origination rate for White borrowers was 86 percent in 2014, compared to 84 percent the previous year. African American origination rates increased four percentage points (70 percent total) from 2013 to 2014. Hispanic origination rates increased to 76 percent, an increase of three percentage points from 2013. Purchase mortgage applications for single-family structures from investors who did not intend to occupy the unit were overwhelmingly from White borrowers, another indication of the impacts of the racial wealth gap. Check out the data for purchase applications, here.
The number of refinance mortgage applications in the Chicago six county region decreased substantially in 2014, compared to 2013. Not only did total mortgage refinance applications decline, but origination rates fell across the board as well. Refinance origination rates for White borrowers in 2014 fell five percentage points from 2013, from 79 to 74 percent. Refinance mortgage origination rates declined the most for African American applicants, falling from 62 percent in 2013 to 49 percent in 2014. Hispanic borrowers’ refinance origination rates declined to 58 percent in 2014, down about eight percentage points from 2013. The Wall Street Journal explained that the major decline in refinancing began in late 2013 when the Federal Reserve ended its bond-buying program, sending 30-year fixed-rate mortgages up a percentage point in a month. All told, roughly $484 million in mortgages were refinanced in 2014, compared with $1.1 trillion in 2013. I encourage you to look at the data yourself and see how your neighborhood fared in 2014.