HOME-MORTGAGE LENDING ACROSS U.S. FALLS TO MORE THAN 20-YEAR LOW IN FIRST QUARTER

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Jun 01, 2023, 00:01 ET

Total Residential Loans Drop Another 19 Percent Quarterly to Lowest Point Since 2000;
Refinance and Purchase Lending Decline Nearly 20 Percent Quarterly, With Refinancing Down 85 Percent Annually;
Home-Equity Lending Decreases for Second Straight Quarter

IRVINE, Calif., June 1, 2023 /PRNewswire/ -- ATTOM, a leading curator of land, property, and real estate data, today released its first-quarter 2023 U.S. Residential Property Mortgage Origination Report, which shows that just 1.25 million mortgages secured by residential property (1 to 4 units) were originated in the first quarter of 2023 in the United States – the lowest point since late-2000. That figure was down 19 percent from the fourth quarter of 2022, marking the eighth quarterly decrease in a row. It also was down 56 percent from the first quarter of 2022 and 70 percent from a peak reached in the first quarter of 2021.

The ongoing sharp decline in residential lending resulted from another round of downturns in both refinance and purchase loan activity as well as the second straight quarterly drop-off in home-equity lending. Lending activity contracted again as a slowdown in the 11-year U.S. housing market that started in the middle of last year stretched into 2023 amid elevated mortgage rates, consumer price inflation and other signs of economic uncertainty.

During a period when average interest rates remained double what they were a year earlier, lenders issued just $388 billion worth of residential mortgages in the first quarter of 2023. That was down quarterly by 20 percent and annually by 58 percent.

The overall activity included 595,253 loans granted to home purchasers in the first quarter of 2023, down 19 percent from the fourth quarter of 2022 and 44 percent from the first quarter of 2022 to the lowest point since early 2014. The dollar volume of purchase mortgages dropped 18 percent quarterly and 45 percent annually, to $216 billion.

On the refinance side, only 407,956 mortgages were rolled over into new ones – the smallest amount this century. That was down 18 percent quarterly, 73 percent annually and 85 percent from the first quarter of 2021. The value of refinance packages was down 21 percent from the prior quarter and 74 percent annually, to $127 billion.

Home-equity lending also went down, dropping 23 percent in the first few months of 2023, to a total of 245,071. The decline marked the second quarterly decrease following a year and a half of gains.

While lending activity kept declining across the board in early 2023, the portion represented by different kinds of home loans held steady. Purchase loans continued to comprise about half of all mortgages issued in the first quarter of 2023, with refinance packages making up a third and home-equity loans 20 percent. But that remained a sea of change from two years ago, when refinance deals made up two-thirds of all activity and purchase loans just one-third.

"Lenders saw opportunities dwindle even more during the first quarter as the longest slowdown in mortgage activity in at least 20 years continued," said Rob Barber, chief executive officer at ATTOM. "In one sense, it wasn't that unusual, given that wintertime is usually the slow time of the year for lenders. But the latest slide extends a run that started two years ago and has carved away nearly three-quarters of the home-mortgage business. Things remain uncertain in the near future, with the potential for interest rates and inflation to go either way, but the Spring buying season will be a key indicator of whether things may turn around."

The across-the-board slump in mortgage activity continues to reflect a combination of economic forces that have helped stall the nation's decade-long housing market boom and, by extension, damaged the mortgage industry. Those forces include mortgage rates that doubled last year, high consumer price inflation, a historically tight supply of homes for sale and broad economic uncertainty. They have combined to make refinancing or borrowing against home equity far less attractive, while also raising the cost of buying a home and limiting purchases.

Total lending activity off 70 percent in just two years
Banks and other lenders issued a total of 1,248,280 residential mortgages in the first quarter of 2023 - the smallest number since the fourth quarter of 2000. The latest figure was down 19.4 percent from 1,548,372 in the fourth quarter of 2022, 55.6 percent from 2,810,051 in the first quarter of 2022 and 70 percent from the most recent high point of 4,154,015 hit in early 2021. The eighth consecutive decrease extended the longest run of declines this century, while the annual downturn marked the largest since at least 2001.

A total of $387.8 billion was lent in the first quarter, which was down 19.8 percent from $483.7 billion in the prior quarter and 58 percent lower than $923.8 billion in the first quarter of 2022.

Overall lending activity decreased from the fourth quarter of 2022 to the first quarter of 2023 in 167, or 97 percent, of the 173 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 first quarter. It was down annually in every one of those metro areas. Total lending activity dropped at least 15 percent quarterly in 109 of the metros with enough data to analyze (63 percent).

The largest quarterly decreases were in Buffalo, NY (total lending down 47.6 percent from the fourth quarter of 2022 to the first quarter of 2023); Albany, NY (down 46.4 percent); Toledo, OH (down 43.5 percent); Knoxville, TN (down 42.7 percent) and St. Louis, MO (down 39.1 percent).

Aside from Buffalo and St. Louis, metro areas with a population of least 1 million that had the biggest decreases in total loans from the fourth quarter of 2022 to the first quarter of 2023 were Rochester, NY (down 34.7 percent); Minneapolis, MN (down 34.1 percent) and Indianapolis, IN (down 32.5 percent).

No metro areas with a population of at least 1 million saw total lending rise during from the fourth quarter of 2022 to the first quarter of 2023. Smaller metro areas where lending did increase quarterly included Fort Myers FL (up 27.8 percent); Lakeland, FL (up 21 percent); Sarasota-Bradenton, FL (up 6.6 percent); Augusta, GA (up 6.1 percent) and Montgomery, AL (up 1.6 percent).

Refinance mortgage originations hit another low point this century
Lenders issued only 407,956 residential refinance mortgages in the first quarter of 2023 – the latest low point since at least 2000. The most recent figure was down 18.2 percent from 498,732 in fourth quarter of 2022 and down 72.5 percent from 1,485,090 in the first quarter of 2022. It also was off 85.2 percent from a peak of 2,749,578 reached in the early 2021. As with total lending, the number of refinance deals dipped for the eighth straight quarter.

The $126.4 billion dollar volume of refinance packages in the first quarter of 2023 was down 20.7 percent from $159.4 billion in the prior quarter and down 73.8 percent from $483.1 billion in the first quarter of 2022.

Refinancing activity decreased from the fourth quarter of 2022 to the first quarter of 2023 in 163, or 94 percent, of the 173 metro areas around the U.S. with enough data to analyze. It dropped quarterly by at least 15 percent in 100 of those metros (58 percent) and was down annually in all of them.

The largest quarterly decreases were in Ann Arbor, MI (refinance loans down 45.7 percent from the fourth quarter to the first quarter); Albany, NY (down 43.3 percent); Toledo, OH (down 41.8 percent); Buffalo, NY (down 41.3 percent) and Dayton, OH (down 40.7 percent).

Aside from Buffalo, metro areas with a population of least 1 million that had the biggest decreases in refinance activity from the fourth quarter of 2022 to the first quarter of 2023 were Detroit, MI (down 33 percent); St. Louis, MO (down 30 percent); Minneapolis, MN (down 30 percent) and Virginia Beach, VA (down 27.2 percent).

Metro areas with sufficient data where the number of refinance loans increased from the fourth quarter to the first quarter included Fort Myers, FL (up 30.6 percent); Honolulu, HI (up 19.7 percent); Amarillo, TX (up 11.9 percent); Eugene, OR (up 8 percent) and El Paso, TX (up 5.5 percent).

Refinance packages comprised just 32.7 percent of all loan originations in the first quarter of 2023, down slightly from 32.2 percent in the prior quarter, but far less than 52.8 percent in the first quarter of 2022 and 66.2 percent in the first quarter of 2021.

Purchase mortgages down 60 percent since 2021 high
Lenders originated 595,253 purchase mortgages in the first quarter of 2023. That was down 18.6 percent from 731,083 in the fourth quarter of 2022, representing the sixth drop in the last seven quarters. It also was off 44.3 percent from 1,067,746 a year earlier and 60 percent from a peak of 1,488,131 in the second quarter of 2021.

The $215.7 billion dollar volume of purchase loans in the first quarter of 2023 was down 18 percent from $263 billion in the prior quarter and 44.5 percent from $388.8 billion a year earlier.

Residential purchase-mortgage originations decreased from the fourth quarter of 2022 to the first quarter of 2023 in 154 of the metro areas in the report (89 percent) and declined in 99 percent annually.

The largest quarterly decreases were in Buffalo, NY (purchase loans down 53.8 percent); Indianapolis, IN (down 46.5 percent); Anchorage, AK (down 45.4 percent); St. Louis, MO (down 45.4 percent) and Rochester, NY (down 44.8 percent).

The biggest decrease in metro areas with a population of at least 1 million in the first quarter of 2023 (aside from Buffalo, Indianapolis, St. Louis and Rochester) came in Minneapolis, MN (down 38.1 percent).

The largest purchase-lending increases from the fourth quarter of 2022 to the first quarter of 2023 in metro areas with a population of at least 1 million were in Tucson, AZ (up 16.9 percent); Tampa, FL (up 5.3 percent); Orlando, FL (up 4.8 percent); Detroit, MI (up 4 percent) and Phoenix, AZ (up 3.7 percent).

Home-purchase loans comprised 47.7 percent of all loan originations in the first quarter of 2023, virtually the same as the 47.2 percent portion in the prior quarter but up from 38 percent in the first quarter of 2022 and 29.2 percent in early 2021.

HELOC lending decreases for second quarter in a row
A total of 245,071 home-equity lines of credit (HELOCs) were originated on residential properties in the first quarter of 2023. That was down 23.1 percent from 318,557 in the prior quarter, the second consecutive drop-off following a string of increases in the prior year and a half. The latest HELOC total also was down 4.7 percent from 257,215 in the first quarter of 2022.

The $45.8 billion volume of HELOC loans in the first quarter of 2023 was down 25.3 percent from $61.3 billion in the fourth quarter of 2022 and down 11.9 percent from $51.9 billion in the first quarter of 2022.

HELOCs comprised 19.6 percent of all loans in the most recent quarter – down from 20.6 percent in the prior quarter but still four times the level in the early part of 2021.

"Home-equity borrowing had been the only thing even partly propping up the home-loan business in the past year as owners were taking advantage of rising equity to draw cash out of their properties for home improvements or other expenses or investments," Barber said. "Now, that also is clearly taking a hit."

HELOC mortgage originations decreased from the fourth quarter of 2022 to the first quarter of 2023 in 94 percent of the metro areas analyzed. The largest decreases in metro areas with a population of at least 1 million were in Buffalo, NY (home-equity credit lines down 43.7 percent); Rochester, NY (down 36.6 percent); St. Louis, MO (down 35.7 percent); Tulsa, OK (down 34.9 percent) and Austin, TX (down 33.7 percent).

No metro areas analyzed with a population of at least 1 million saw quarterly increases in HELOCs.

FHA and VA loan portions again up slightly
Mortgages backed by the Federal Housing Administration (FHA) rose as a portion of all lending for the sixth straight quarter. They accounted for 161,639, or 12.9 percent, of all residential property loans originated in the first quarter of 2023. That was up from 11.9 percent in the fourth quarter of 2022 and 10.4 percent in the first quarter of 2022.

Residential loans backed by the U.S. Department of Veterans Affairs (VA) totaled 68,606, or 5.5 percent, of all residential property loans originated in the first quarter of 2023. That was up from 5.3 percent in the previous quarter – the third consecutive increase - although still down from 5.6 percent a year earlier.

Report methodology
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.

About ATTOM
ATTOM provides premium property data to power products that improve transparency, innovation, efficiency, and disruption in a data-driven economy. ATTOM multi-sources property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, and neighborhood data for more than 155 million U.S. residential and commercial properties covering 99 percent of the nation's population. A rigorous data management process involving more than 20 steps validates, standardizes, and enhances the real estate data collected by ATTOM, assigning each property record with a persistent, unique ID — the ATTOM ID. The 30TB ATTOM Data Warehouse fuels innovation in many industries including mortgage, real estate, insurance, marketing, government and more through flexible data delivery solutions that include bulk file licenses, property data APIs, real estate market trends, property navigator and more. Also, introducing our newest innovative solution, that offers immediate access and streamlines data management – ATTOM Cloud.

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