ATTOM’s residential property mortgage origination report shows 3.59 million residential mortgages originated in the third quarter. That’s up 3 percent year-over-year, but down 8 percent from the second quarter – the largest quarterly dip in over a year.
The quarterly decline also is the second in a row and pointed to two unusual patterns developing in the lending industry, according to ATTOM. It marked the first time in more than two years total lending decreased in two consecutive quarters. More notably, it was the first time since at least 2000 lending activity declined in both the second and third quarters, which usually are peak buying seasons.
That pattern emerged amid declines in both refinance and purchase lending which more than made up for a bump up in home-equity lines of credit.
“The overflow stack of work that was hitting lenders for several years shrank again in the third quarter across the U.S. amid a few emerging trends,” ATTOM Chief Product Officer Todd Teta said in a release. “It looks more and more like homeowner’s voracious appetites for refinance deals has eased notably, while purchase lending also dipped. It’s still too early to say if the trends point to major shifts in lending patterns or the broader housing market boom. But the drop-off is significant, especially for home buying, which could suggest an impending housing market slowdown.”
Overall, with average interest rates remaining below 3 percent for 30-year home loans, lenders issued $1.15 trillion worth of mortgages in the third quarter. That was up annually by 11 percent, but down quarterly by 6 percent.
On the refinance side, 1.99 million home loans were rolled over into new mortgages during the third quarter, down 13 percent from the second quarter and down 3 percent year-over-year. The total number of refinance mortgages declined for the second straight quarter, while the quarterly decrease was the largest in three years. The dollar volume of refinance loans was down 10 percent from the second quarter, to $624.1 billion, although still up annually by 1 percent.
Refinance mortgages remained most of all residential lending activity during the third quarter. But that portion dipped to 55 percent, down from 59 percent in both the second quarter of 2021 and the third quarter of 2020.
The number of purchase loans also declined as lenders issued 1.36 million mortgages to buyers. That was down 2 percent quarterly, although still up 17 percent annually. The dollar value of loans taken out to buy property dipped to $482.6 billion, down 1 percent from the second quarter but up 30 percent year-over-year.
Home-equity lending rose for the second straight quarter. The tally of home-equity lines of credit, while down annually by 9 percent, rose 2 percent between the second and third quarters, to about 238,500.
Banks and other lenders issued 3,591,794 residential mortgages in the third quarter. That was down 8.4 percent from 3,922,248 in second quarter and up 3.2 percent from 3,479,655 a year ago. The quarterly decrease was the second in a row and was first time since at least 2000 that total lending activity went down from both the first to the second quarter and from the second to the third quarter of any year.
Overall lending activity decreased from the second to third quarter in 186, or 86 percent, of the metro areas that ATTOM studied. Total lending activity was down at least 5 percent in 126 metros (58 percent). The largest quarterly decreases were in Pittsburgh (down 52.3 percent); Charleston, S.C. (down 48.2 percent); Myrtle Beach, S.C. (down 46.8 percent); Provo, Utah (down 39.5 percent) and Peoria, Ill. (down 33.9 percent).
Aside from Pittsburgh, metro areas with a population of least 1 million that had the biggest quarterly decreases in total loans were Buffalo, N.Y. (down 29.8 percent); Baltimore (down 20.9 percent); New Orleans (down 20.4 percent) and Atlanta (down 17.5 percent).
Metro areas with the biggest quarterly increases in the total number of mortgages were Ann Arbor, Mich. (up 122.7 percent); Des Moines, Iowa (up 70.5 percent); Sioux Falls, S.D. (up 51.5 percent); Yakima, Wash. (up 31.4 percent) and Dayton, Ohio (up 30.6 percent).
The only metro areas with a population of at least 1 million and a quarterly increase in total mortgages were Jacksonville, Fla. (up 5.5 percent); Memphis, Tenn. (up 4.3 percent) and Columbus, Ohio (up 2.7 percent).