In the fourth quarter of 2022, 1.52 million mortgages secured by residential properties (1 to 4 units) were originated in the United States, the fewest since the first quarter of 2014, according to a new report from ATTOM.
The curator of land, property, and real estate data released its fourth-quarter 2022 U.S. Residential Property Mortgage Origination Report, which found that total originations fell 24% from the third quarter — the seventh consecutive quarterly decline — and 55% from a year earlier, the largest annual decline since at least 2001.
The continuing decline in residential lending resulted from some of the largest downturns in both refinance and purchase loan activity this century, as well as from the first drop in home-equity lending in a year, ATTOM said.
The contraction continued as the 11-year U.S. housing market boom stalled in the second half of 2022 amid rising mortgage rates, consumer price inflation, and other signs of economic uncertainty, the report said.
During a period when average mortgage interest rates doubled to nearly 7% for 30-year fixed loans, lenders issued just $476 billion worth of mortgages in the fourth quarter of 2022, down 27% from the third quarter and 57% year over year.
Within the overall activity, there were 708,739 loans granted to home purchasers in the fourth quarter, down 26% from the third quarter and down 45% from the fourth quarter of 2021. The dollar volume of purchase mortgages dropped 28% quarterly and 44% annually, to $257 billion, ATTOM said.
For refinance activity, only 496,221 mortgages were rolled over into new ones, down 27% quarterly and down 73% year over year. The dollar volume of refinance loans was down 27% from the prior quarter and 73% annually, to $158 billion.
Even home-equity lending fell, dropping 16% in the last few months of 2022, to a total of 313,973. The decline followed growth in five of the previous six quarters, the report said.
“The lending industry experienced a triple-dose of hits in the fourth quarter of last year, as mortgage rates kept rising to levels not seen in more than 15 years and the U.S. housing market continued to stall after a decade of prosperity,” said ATTOM CEO Rob Barber. “Rates have settled back down a bit so far this year, going back and forth in small amounts. That could lure some potential home buyers back into the market, especially if prices keep dropping. It also could spur some renewed refinance and HELOC action.”
In another sign of how much lending patterns have changed over the past two years, refinance activity represented just one-third of overall mortgages at the end of 2022, compared to two-thirds as recently as the first quarter of 2021. Purchase loans, meanwhile, comprised almost half of all loans, compared to about 30% early in 2021.
Despite its decline, home-equity lines of credit still made up one of every five mortgages in the fourth quarter of 2022, up from one of every 22 in the first few months of 2021.
Key Highlights:
- Overall lending activity decreased from the third quarter to the fourth quarter of 2022 in all 191 of the metropolitan statistical areas around the U.S. with a population of 200,000 or more and at least 1,000 total residential mortgages issued in the fourth quarter of 2022. It was down annually in all but one of those metro areas. Total lending activity dropped at least 25% quarterly in 83 of the metros with enough data to analyze (43%).
- The largest quarterly decreases were in Honolulu (total lending down 47.7% from the third to the fourth quarter of 2022); Knoxville, Tenn. (down 47.6%); Buffalo, N.Y. (down 42.2%); Charleston, S.C. (down 40.1%) and Beaumont, Texas (down 36.3%).
- Aside from Buffalo and Honolulu, metro areas with a population of least 1 million that had the biggest decreases in total loans from the third quarter to the fourth quarter of 2022 were San Jose, Calif. (down 32.7%); St. Louis (down 32.6%) and Seattle (down 32.5%).
- The smallest decreases from the third quarter to the fourth quarter of 2022 in metro areas with a population of at least 1 million were in Tampa, Fla. (down 15.4%); Dallas, (down 15.5%); Orlando, Fla. (down 16.2%); Miami (down 17.3%) and Baltimore (down 19.2%).
- Lenders issued 496,221 residential refinance mortgages in the fourth quarter of 2022 — the smallest count since at least the first quarter of 2000.The latest number was down 26.7% from 676,662 in third quarter of 2022 and down 73.4% from 1.87 million in the fourth quarter of 2021 – the largest annual fall this century. It also was off 81.9% from a recent high of 2.74 million in the first quarter of 2021. As with total lending, the number of refinance deals dipped for the seventh straight quarter, extending the longest run of declines this century.
- Refinancing activity decreased from the third quarter of 2022 to the fourth quarter of 2022 in 186, or 97% of the 191 metropolitan statistical areas around the country with enough data to analyze. It was down annually in all 191 of those metros.
- Lenders originated 708,739 purchase mortgages in the fourth quarter of 2022. That was down 26.1% from 959,244 in the third quarter of 2022, and down 45% from 1,29 million in the fourth quarter of 2021.
- Residential purchase-mortgage originations decreased from the third quarter to the fourth quarter of 2022 in 188 of the 191 metro areas in the report (98 percent) and dipped in the same number annually.
- A total of 313,973 home-equity lines of credit (HELOCs) were originated on residential properties in the fourth quarter of 2022. That was down 16.2% from 374,703 in the prior quarter. However, the latest number was still up 31.8% from 238,164 in the fourth quarter of 2021.
ATTOM analyzed recorded mortgage and deed of trust data for single-family homes, condos, town homes, and multi-family properties of two to four units for this report. Each recorded mortgage or deed of trust was counted as a separate loan origination. Dollar volume was calculated by multiplying the total number of loan originations by the average loan amount for those loan originations.
