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Mortgage Lending Plummets Across U.S. In Q1

Keith Griffin
Jun 09, 2022
Attom residential mortgages 1Q 2022

Only bright spot in the segment was home equity loans, which grew 28% annually.

The first quarter of 2022 was one of the worst in years for mortgage originations, according to a report released today by ATTOM, the real estate data curator. That severely contradicts industry expectations.

The report shows lenders issued $892.4 billion worth of mortgages in the first quarter of 2022. That was down quarterly by 17% and annually by 27%.

Those numbers run counter to what the industry expected. Mortgage Bankers Association President Bob Broeksmit told the 2022 Secondary & Capital Markets Conference & Expo in mid-May, “We’re also confident that 2022 will still be a record year for purchase volume. The number of units will fall a little compared to last year, but the dollar amount of new purchase loans will rise to a record due to the steady increase in home prices.”

“The drop-off in Q1 refinancing activity is no surprise with mortgage rates rising as rapidly as they have,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “But many forecasts expected purchase loans to remain strong in 2022, and even increase in both the number of loans originated and the dollar volume of those loans. The weakness in purchase loan activity shows just how much of an impact the combination of escalating home prices and rising interest rates have had on borrower activity this year.”

The ATTOM report showed that 2.71 million mortgages secured by residential property (1 to 4 units) were originated in the first quarter of 2022 in the United States. That figure was down 18% from the fourth quarter of 2021 — the largest quarterly decrease since 2017 – and down 32% from the first quarter of 2021 — the biggest annual drop since 2014.

Purchase-loan activity shrank in the first quarter of 2022 as lenders issued 1.01 million mortgages to buyers. That tally was down 18% quarterly and 12% annually. The dollar value of loans taken out to buy residential properties dipped to $371.3 billion, down 16% from the fourth quarter of last year and 1% from the first quarter of 2021. Despite those decreases, purchase loans remained at 37% of all loans in the first quarter of 2022 and were still up annually from 29%.

ATTOM said in its report the biggest contributor to the downturn was the already well-known decrease in refinance deals. Just 1.45 million residential loans were rolled over into new mortgages during the first quarter of 2022, down 22% from the fourth quarter of 2021 and 46% from a year earlier. Amid rising mortgage interest rates, the number of refinance mortgages decreased for the fourth straight quarter while the annual drop was the largest since 2014. The dollar volume of refinance loans was down 20% from the prior quarter and 42% annually, to $470.7 billion.

In the one category that bucked the trend, home-equity lending went up 6% quarterly and 28% annually, to 249,900. So-called HELOC mortgages represented 9% of all first-quarter residential loans, up from 7% in the fourth quarter of 2021 and 5% in the first quarter of last year. The $50.4 billion first-quarter 2022 volume of HELOC loans was up 8.2 percent from $46.6 billion in the fourth quarter of 2021 and 26.3 percent from $39.9 billion the first quarter of last year.

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