According to ATTOM’s second-quarter 2021 U.S. Residential Property Mortgage Origination Report, 3.78 million residential mortgages were secured in the second quarter. That figure was up 29 percent year-over-year, but down 3 percent from the first quarter.
The quarterly decline marked the first time since early in 2020 that home mortgages decreased, and the first drop from a first quarter to a second quarter since 2011.
“The demand for home loans across the country shifted significantly in the second quarter as refinancing activity receded and home-purchase and equity loans increased. We haven’t seen that pattern for several years,” ATTOM Chief Product Officer Todd Teta said in a release. “The big increase in households looking to buy surely had a lot to do with that. And we may be getting to the point where so many homeowners have refinanced that the need for those deals is tapping out. We will see whether this is a momentary blip or a real trend over the next few months, which looks to be a really key period for the lending industry.”
With residential mortgage interest rates dropping back below 3 percent for most 30-year fixed-rate purchase and refinance loans, lenders issued $1.18 trillion worth of mortgages in the second quarter. That was up 39 percent year-over-year but down 1 percent quarterly.
Lenders refinanced 2.23 million home loans in the second quarter, up 26 percent from a year ago but down 15 percent from the first quarter. The second-quarter dollar value of refinance loans rose annually, by 26 percent, but went down quarterly, by 15 percent, to $674.7 billion.
Refinance mortgages still accounted for most of all home-lending activity in the second quarter. But the portion dipped from 67 percent to 59 percent, the biggest drop in four years.
The cooling-off on the refinance side offset a spike in the number of purchase loans issued in the second quarter to 1.32 million, a 52 percent annual and 22 percent quarterly rise. The dollar value of loans jumped to $465.5 billion, a 77 percent gain year-over-year and a 31 percent quarterly increase.
Home-equity lines of credit (HELOC) also rose from the first to the second quarter, to about 225,000. That number, while down annually by 18 percent, was up quarterly by 18 percent. The increase marked the first quarterly rise in HELOC activity since the third quarter of 2019.
The second-quarter dip in total lending and the shift in loan patterns reflected a broader housing market that remained super-heated during the second quarter of 2021, according to ATTOM. At the same time, the refi drop could be an indication that lenders may have finally satisfied homeowners’ appetites for rolling over old mortgages into newer ones at lower rates.
Overall lending activity dropped quarterly in 46.3 percent of the 218 metro areas with a population greater than 200,000 and at least 1,000 total loans in the second quarter. The largest quarterly decreases were in Ann Arbor, Mich. (down 59.6 percent); Sioux Falls, S.D. (down 57.1 percent); Appleton, Wis. (down 56.6 percent); Des Moines, Iowa (down 55.6 percent); and Myrtle Beach, S.C. (down 52.9 percent).
Metro areas with at a population of least 1 million with the biggest quarterly decreases in loans were St. Louis (down 41.9 percent); Pittsburgh, (down 23.9 percent); Atlanta (down 17.1 percent); Seattle (down 15.8 percent) and San Francisco (down 15.7 percent).
Metro areas with the biggest quarterly increases in mortgages were Virginia Beach, Va. (up 50.4 percent); Scranton, Pa. (up 35.5 percent); Erie, Pa. (up 35.3 percent); Oklahoma City (up 34.9 percent) and Syracuse, N.Y. (up 32.2 percent).
Refinancing activity decreased quarterly in 82.1 percent of the 218 metro areas that ATTOM analyzed. The largest quarterly decreases were in Des Moines, Iowa (down 66.2 percent); Sioux Falls, S.D. (down 65.4 percent); Ann Arbor, Mich. (down 64.3 percent); Appleton, Wis. (down 52.5 percent) and Myrtle Beach, S.C. (down 50.2 percent).
Metro areas with at a population of least 1 million that had the biggest quarterly decreases in refinance activity were St. Louis (down 49.5 percent); Pittsburgh (down 38.4 percent); Portland, Ore. (down 33 percent); Seattle (down 32.8 percent) and Denver (down 29.1 percent).
Metro areas with the biggest quarterly increases in refinancing loans were Scranton, Pa. (up 27.8 percent); Syracuse, N.Y. (up 27.5 percent); Virginia Beach, Va. (up 25.2 percent); Tuscaloosa, Ala. (up 19.9 percent) and Florence, S.C. (up 18.6 percent).