According to ATTOM, a curator of land, property, and real estate data, mortgage originations were down in the third quarter.
Data show that 1.54 million mortgages secured by residential property (1 to 4 units) were issued during the third quarter, representing a 3% decline from the prior three-month period. That drop-off marked the ninth decline in the last 10 quarters – a string broken only by a spike during the second quarter of this year.
Despite the overall decline, there were some bright spots in the report. Refinance activity increased for the second straight quarter, rising 5% to 516,461 loans. This was driven by homeowners taking advantage of still-relatively low interest rates to refinance their existing mortgages.
However, purchase lending and home-equity lines of credit (HELOCs) both declined in the third quarter. Purchase loans fell 7% to 751,720 loans, while HELOCs dropped 7% to 271,647 loans. These declines were likely due to rising mortgage rates and home prices, which have made it more difficult for some borrowers to qualify for loans.
Overall, lending activity remains well below the levels seen in recent years. The total dollar volume of residential mortgages originated in the third quarter was $482 billion, down 28% from a year earlier.
"The mortgage industry took another hit in the third quarter as the spike in residential lending during the Spring turned out to be temporary," said Rob Barber, CEO at ATTOM. "Refinance deals stood out as the lone bright spot. That seemed a bit odd given that interest rates went up, but may have stemmed from homeowners pulling cash out of their growing equity. Overall, the impact of higher rates and other forces working against borrowers remained striking, resulting in total loan activity still off by a remarkable two-thirds over just two years."
Barber added that "the typical housing market slowdown during the Fall is likely to further reduce purchase lending in the immediate future while borrowing by homeowners should hold fairly steady if projections for stable interest rates turn out to be accurate."
Here are some additional key findings from the report:
- The median down payment on a single-family home purchase increased to 9.2% of the median purchase price in the third quarter of 2023, up from 8.2% in the prior quarter.
- FHA loans accounted for 15.2% of all residential property loans originated in the third quarter of 2023, up from 13.7% in the second quarter of 2023.
- VA loans accounted for 4.9% of all residential property loans originated in the third quarter of 2023, down from 5.4% in the previous quarter.