Blomquist: That's the primary driving factor: rising interest rates that occurred pretty much right on the heels of the election. I do think there's some uncertainty because of the election about the future of the country and the psychological impact, as well, of someone thinking of buying a house—that could affect their decision to buy or not to buy; I don't want to underplay the psychological impact of the election. But interest rates are the driving factor. When we look at the markets that are seeing the bigger decreases in purchase originations, it does tend to be the higher-priced markets that are logically more interest-rate sensitive, whereas on the flip side, when you're talking about larger markets, purchase originations actually went up in middle-of-the-road-priced markets. Markets like Memphis; Kansas City; Spokane, WA; and Milwaukee are all seeing increases in purchase originations because they aren't as interest-rate sensitive.

GlobeSt.com: If interest rates are rising, why are more people looking to refinance now?

Blomquist: We saw a surge in refi financing in the third quarter, but to see this in Q4 was a bit of a surprise. I chalk that up to homeowners wanting to lock in near-record-low interest rates to before they go up any further.

GlobeSt.com: What do you expect to see in terms of purchase and refinance trends going forward?

Blomquist: I do think we will see this mini boom in refis slow down in 2017, particularly if rising interest rates do come to fruition. Rising interest rates will also have a chilling effect on purchase origination compared to last year. We saw that back in 2014, when rising interest rates at that time were just over 4%—that did have a chilling effect on overall loan originations for most of that year and most of 2015 before picking up again.

GlobeSt.com: What else should our readers take away from this report?

Blomquist: Non-banks like Quicken Loans are continuing to gain share, while the Wells Fargos and Bank of Americas and JPMorgans of the world are losing share when it comes to origination. Another piece that's interesting is the down-payment piece. We saw a shorter-term trend of a rise in average down payments at the end of 2016. First-time home buyers were more affected by mortgage rates, so they paid bigger down payments at the end of the year and were more involved in the housing market.

IRVINE, CA—Rising interest rates are having a chilling effect on home purchases, but surprisingly are encouraging homeowners to refinance in order to lock in rates before they rise too high, ATTOM Data Solutions' SVP Daren Blomquist tells GlobeSt.com. The firm recently released its Q4 2016 U.S. Residential Property Loan Origination Report, which showed that refinance originations continued to post strong numbers compared to a year ago in the fourth quarter, even as purchase originations decreased on a year-over-year basis for the second consecutive quarter, according to Blomquist

“The increase in refinance originations is surprising given the rising interest rates in the fourth quarter, but many homeowners may have been trying to lock in still relatively low interest rates before those interest rates rose further,” says Blomquist. “On the other hand, rising interest rates did seem to have a chilling effect on homebuyers using financing, as evidenced not only by the drop in purchase loan originations. but also a corresponding rise in the share of cash buyers, drop in FHA-buyer share and a rise in the average-down-payment percentage in the fourth quarter compared to the previous quarter.”

We spoke with Blomquist about the factors contributing to the decrease in purchase originations and what he expects to see in terms of purchase and refinance trends going forward.

GlobeSt.com: Aside from rising interest rates, to what do you attribute the decrease in purchase originations?

Blomquist: That's the primary driving factor: rising interest rates that occurred pretty much right on the heels of the election. I do think there's some uncertainty because of the election about the future of the country and the psychological impact, as well, of someone thinking of buying a house—that could affect their decision to buy or not to buy; I don't want to underplay the psychological impact of the election. But interest rates are the driving factor. When we look at the markets that are seeing the bigger decreases in purchase originations, it does tend to be the higher-priced markets that are logically more interest-rate sensitive, whereas on the flip side, when you're talking about larger markets, purchase originations actually went up in middle-of-the-road-priced markets. Markets like Memphis; Kansas City; Spokane, WA; and Milwaukee are all seeing increases in purchase originations because they aren't as interest-rate sensitive.

GlobeSt.com: If interest rates are rising, why are more people looking to refinance now?

Blomquist: We saw a surge in refi financing in the third quarter, but to see this in Q4 was a bit of a surprise. I chalk that up to homeowners wanting to lock in near-record-low interest rates to before they go up any further.

GlobeSt.com: What do you expect to see in terms of purchase and refinance trends going forward?

Blomquist: I do think we will see this mini boom in refis slow down in 2017, particularly if rising interest rates do come to fruition. Rising interest rates will also have a chilling effect on purchase origination compared to last year. We saw that back in 2014, when rising interest rates at that time were just over 4%—that did have a chilling effect on overall loan originations for most of that year and most of 2015 before picking up again.

GlobeSt.com: What else should our readers take away from this report?

Blomquist: Non-banks like Quicken Loans are continuing to gain share, while the Wells Fargos and Bank of Americas and JPMorgans of the world are losing share when it comes to origination. Another piece that's interesting is the down-payment piece. We saw a shorter-term trend of a rise in average down payments at the end of 2016. First-time home buyers were more affected by mortgage rates, so they paid bigger down payments at the end of the year and were more involved in the housing market.