In the second quarter, 2.39 million residential mortgages were originated, down 13 percent from the first quarter (the fifth quarterly decrease in a row) and down 40 percent year-over-year (the biggest annual drop since 2014), according to ATTOM’s latest residential property mortgage origination report.
ATTOM attributed that decline to another double-digit downturn in refinance activity, both quarter-over-quarter and year-over-year.
“Mortgage rates that have virtually doubled over the past year have decimated the refinance market and are starting to take a toll on purchase lending as well,” ATTOM Executive Vice President of Market Intelligence Rick Sharga said in a release. “The combination of much higher mortgage rates and rising home prices has made the notion of homebuying simply unaffordable for many prospective buyers, which threatens to drive loan volume down even further as we exit the spring and summer months.”
For the first time since early 2019, refinance activity in the second quarter did not represent the largest chunk of mortgages, dropping to 39 percent of all loans. That was down from 53 percent in the first quarter and from a recent peak of 66 percent in early 2021.
Purchase-loan activity rose 8 percent quarterly, representing 46 percent of all borrowing. The best-performing category in the second quarter was home-equity lending. HELOCS soared 35 percent quarterly and 44 percent annually.
“Borrowers looking to tap into their equity should know that HELOC activity has been particularly strong among credit unions and community banks, along with a small but growing number of depository banks,” Sharga said. “While non-bank mortgage lenders may begin to more aggressively originate home equity loans, it’s not likely they’ll be active participants in the HELOC market.”
Banks and other lenders issued 2.39 million residential mortgages in the second quarter, down 13.2 percent from 2.7 million in the first quarter and down 40 percent year-over-year from 4 million. The annual decline marked the largest since the first quarter of 2014.
Overall lending activity decreased quarter-to-quarter in 80 percent of the metro areas with a population of more than 200,000 that ATTOM analyzed. The largest quarterly decreases were in Knoxville, Tenn. (down 59.9 percent), Roanoke, Va. (down 52.7 percent), Charleston, S.C. (down 37 percent), St. Louis (down 28.7 percent) and Philadelphia (down 27.3 percent).
Aside from St. Louis and Philadelphia, metro areas with a population of least 1 million that had the biggest decreases in loans from the first to the second quarter were New York (down 25.9 percent), Detroit (down 25.6 percent) and San Jose, Calif. (down 24.7 percent).
The biggest increases in the number of mortgages from the first to second quarter were in Atlantic City, N.J. (up 32.5 percent), Erie, Pa. (up 18.8 percent), Peoria, Ill. (up 17.4 percent), Topeka, Kan. (up 15.6 percent) and Utica, N.Y. (up 14.6 percent).
The only metro areas with a population of at least 1 million where loan originations increased were Honolulu (up 9.9 percent), Kansas City, Mo. (up 3.4 percent) and Rochester, N.Y. (up 3.2 percent).
Lenders issued 941,111 residential refinance mortgages in the second quarter, the smallest count since the second quarter of 2019. That was down 36 percent from the first quarter and 60 percent year-over-year.
Refi activity decreased from the first to second quarter in 99 percent of the metro areas ATTOM analyzed. The largest quarterly decreases were in Roanoke, Va. (down 65.8 percent), Knoxville, Tenn. (down 64.4 percent), San Jose, Calif. (down 58.5 percent), Oxnard, Calif. (down 56.3 percent) and Charleston, S.C. (down 55.3 percent).
Aside from San Jose, metro areas with a population of least 1 million that had the biggest decreases in refi activity were Portland, Ore. (down 53.2 percent), San Francisco (down 52.9 percent), Sacramento, Calif. (down 51.8 percent) and Chicago (down 49.8 percent).
The only metro areas where refi lending increased from the first to second quarter were Atlantic City, N.J. (up 23.7 percent) and Utica, N.Y. (up 8.5 percent).
Lenders originated 1.1 million purchase mortgages in the second quarter, up 7.6 percent from the first quarter but down 21.5 percent year-over-year. Residential purchase-mortgage originations increased quarter-over-quarter in 80 percent of metros analyzed but were down annually in 90 percent.
The largest quarterly increases were in Madison, Wis. (up 60.8 percent), Honolulu (up 55.8 percent), Lafayette, Ind. (up 55.5 percent), Champaign, Ill. (up 52.6 percent) and Jackson, Miss. (up 49.3 percent). Aside from Honolulu, metro areas with a population of at least 1 million that saw the biggest quarterly increases were Boston (up 41.7 percent), Seattle (up 33.6 percent), Richmond, VA. (up 31.9 percent) and Birmingham, Ala. (up 29.9 percent).
Residential purchase-mortgage lending decreased most in Knoxville, Tenn. (down 52 percent), Roanoke, Va. (down 37.3 percent), Salinas, Calif. (down 18.1 percent), Ogden, Utah (down 16.9 percent) and Boise, Idaho (down 13.6 percent).
Metro areas with a population of at least 1 million where purchase originations decreased most from the first to second quarter were New York (down 12 percent), Los Angeles (down 11 percent), St. Louis (down 10.7 percent), Philadelphia (down 10.7 percent) and Detroit (down 9.5 percent).
HELOCs in the second quarter were up 34.5 percent from the first quarter and up 43.8 percent annually and made up 14.3 percent of all second-quarter loans, more than double the 6 percent level from a year earlier.
HELOC mortgage originations increased in 94 percent of the metro areas analyzed. The largest increases in metro areas with a population of at least 1 million were in Fresno, Calif. (up 82.9 percent), Riverside, Calif. (up 80.9 percent), Buffalo (up 53.2 percent), San Diego (up 52 percent) and Los Angeles (up 51.5 percent). The only quarterly decrease in HELOCs among metro areas with a population of at least 1 million was in St. Louis (down 11.7 percent).