MORTGAGE LENDING IN THE UNITED STATES DECLINED AT THE FASTEST RATE IN NEARLY 3 YEARS DURING THE FOURTH QUARTER

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In 2021, mortgages backed by residential property totaling 3.27 million (1 to 4 units) were originated in the United States, as per ATTOM’s fourth 2021 U.S. Residential Property Mortgage Origination Report. This decreases 11% over the third quarter of 2021 and 13% over the fourth quarter of 2020.

For the third quarter in a row, the overall number of mortgages granted fell, with the yearly drop being the greatest since late 2018. The total dip was due to quarterly declines in all three types of conventional loanspurchase, refinancing, and home equityacross the board. Only Payday Champion lender increased the number of all loans from the previous year.

In the fourth quarter of 2021, lenders granted $1.06 trillion in mortgages. This was down 9% quarterly and 7% on an annual basis. Both drops in the dollar volume of loans were the most significant since the beginning of the year.

Fourth quarter of 2021

In the fourth quarter of 2021, 1.81 million house loans were rolled over into new mortgages, down 11% from the third quarter and 23% from a year earlier. For the third quarter in a row, the overall number of refinancing mortgages fell, with the yearly dip being the greatest in three years. Refinance loans totaled $578 billion in the third quarter of 2021, down 9% from the third quarter of 2021 and 18% yearly.

While refinancing mortgages accounted for the bulk of residential lending activity in the fourth quarter of 2021, their share of total loans fell again. They accounted for 55% of all mortgages in the fourth quarter, down from 56% in the third quarter of 2021 and 62% in 2020.

In the fourth quarter of 2021, lenders granted 1.22 million mortgages to purchasers, a decrease from the previous quarter. This was down 11% quarterly but up 3% annually. Loans to purchase homes and condos totaled $439 billion in the third quarter of this year, down 10% from the third quarter of last year but still up 14% from the fourth quarter of 2020. Purchase loans fell from 38 percent in the third quarter of 2021 to 37 percent in the fourth quarter of 2021 but were still up year over year from 3 percent.

Home-equity lending fell by 5% quarterly to over 230,700, despite a minor rise in the total number of loans.

The fourth-quarter declines in all three mortgage categories and the third consecutive reduction in overall lending were indicators that the near-tripling of loan activity from 2019 to 2021 has come to a halt, at least temporarily. 

The most recent figures are most likely the result of numerous trends colliding at the exact moment. Homeowners’ desire for refinancing loans is finally being met, and mortgage rates are rising. Furthermore, during the Coronavirus epidemic, there was a scarcity of properties for sale, pushing prices up but selling down.

“The residential mortgage industry’s declining volume of business is now seen across all major loan categories and looks to be more than a passing trend.” According to Todd Teta, chief product officer of ATTOM, “the ebbing tide of refinancing loans that began in early 2021 has completely expanded to home-purchase and home-equity lending.” “Over the last decade, overall loan levels have unquestionably risen beyond typical levels. 

And the decline in purchase loans seems to be due to a shortage of house availability more than the conclusion of the housing market bubble. However, with interest rates expected to rise this year, lenders’ falling activity remains an essential factor to consider when judging the industry’s status.”

A three-year low in total mortgages

In Q4 2021, banks and other lenders provided 3,266,907 home mortgages. This was down 10.7% from the third quarter of 2021 and 13.5 % from the fourth quarter of 2020.

The quarterly and yearly decreases were the steepest since the first quarters of 2019 and 2018. The current number was likewise 18.1% below the first quarter of 2021 high.

All loans totaled $1.06 trillion in the fourth quarter, down 9% from $1.17 trillion in the preceding quarter and 6.5 percent from $1.14 trillion in the fourth quarter of 2020.

All 215 metro statistical regions with a population more than 200,000 and at least 1,000 total residential mortgages issued reduced overall loan activity from the third quarter to the fourth quarter of 2021. 163 metros had a 5% drop in total loans (76 percent). Largest quarterly declines were in Provo (54.3%), Huntsville (53.9%), Hickory-Lenoir (48.5%), Pittsburgh (43.8%) and Peoria (43.8%). (down 40.9 percent).

Aside from Pittsburgh, the largest drops in total loans from the third to fourth quarter of 2021 were in St. Louis, MO (22.1%), San Jose, CA (19.6%), Birmingham, AL (17.4%) and Chicago, IL (17.4%). (down 17.1 percent).

Most mortgages increased from the third to fourth quarter of 2021 in Buffalo (25%) Utica (13.6%) Hilton Head (11.6%) Shreveport (8.1%) and New Orleans (8.2%). (up 6.8 percent).

Except for Buffalo and New Orleans, only Raleigh, NC (up 2.7%), Baltimore, MD (up 2.4%), and Cleveland, OH (up 2.4%) had an increase in total mortgages from the third to fourth quarter of 2021. (up 1.1 percent).

Originations of refinance mortgages fell 11% from Q3

In the fourth quarter of 2021, lenders granted 1,812,512 residential refinancing mortgages, down 10.8% from the third quarter and 22.7 percent from the fourth quarter of 2020. The total fell for the third quarter in a row, the first time since late 2018. The $578 billion volume of refinances in Q4 2021 was down 9% from Q3’s $635.4 billion and 17.5 percent from Q4 2020’s $700.7 billion.

In 193 of the 215 MSAs with relevant data to evaluate, refinancing activity fell from the third to the fourth quarter of 2021. 101 metros had a 10% reduction in activity (47 percent). Provo, UT (-55.3%), Huntsville, AL (-52.3%), Pittsburgh (-46.6%), Hickory-Lenoir (-42.9%), and Peoria (-42.9%). (down 35.3 percent).

Beyond Pittsburgh, the most affected metro regions by the decline in refinancing activity from the third to fourth quarter of 2021 were Salt Lake City (29.8%), San Jose (23.2%), St. Louis (22%), and San Francisco (22%). (down 19.3 percent).

Contrary to the national trend, refinancing loans increased in Utica, NY (62.4%), Buffalo, NY (25.1%), Shreveport, LA (14.8%), Sioux Falls, SD (11.5%), and Baton Rouge, LA (11.5%). (up 11 percent).

Except for Buffalo, refinancing mortgages climbed 10.4% from the third to the fourth quarter of 2021 in New Orleans, Cleveland, and Baltimore (up 2.1 percent).

In three-quarters of metros, refinance loans account for 50% of total loans.

Refinance activity continued to fall, but still represented at least half of all mortgages granted in the fourth quarter of 2021 in 155 (72%) of 215 metro areas with enough data to evaluate. 100 percent in the third quarter of 2020, but down from 91 percent a year ago.

Atlanta, GA (73.1%), Detroit, MI (67.2%), New Orleans, LA (64.3%), Kansas City, MO (62.3%), and Providence, RI (62.3%) had the highest percentage of refinancing loans in the fourth quarter of 2021. (62.2 percent).

Rochester, NY (43.6%), Oklahoma City, OK (43.9%), Buffalo, NY (47.2%), Salt Lake City (47.9%), and Grand Rapids, MI (47.3%) had the lowest percentage of refinancing loans in the fourth quarter of 2021. (49.1 percent).

Purchase originations fall 11% in Q4

In Q4 2021, lenders issued 1,223,661 purchase mortgages. This was down 11.3 percent from the third quarter, but up 2.8 percent from the fourth quarter of 2020’s 1.189,920. Purchase loans totaled $439 billion in the fourth quarter of 2021, down 10% from the preceding quarter but up 14% from $384.6 billion a year earlier.

In 186 of the 215 metro areas surveyed, mortgage originations fell from the third to the fourth quarter of 2021. (87 percent). Provo, UT (-55.2%), Hickory-Lenoir, NC (-54.1%), Huntsville, AL (-53.5%), Sioux Falls, SD (-51.5%), and Pittsburgh (-51.5%). (down 48.2 percent).

Aside from Pittsburgh, the largest quarterly drops in buy originations were seen in St. Louis, MO (23.3%), Atlanta, GA (21.6%), Rochester, NY (21.4%), and Chicago, IL (21.4%). (down 20.7 percent).

Residential purchase-mortgage lending rose from Q3 to Q4 of 2021 in 29 of 215 metro regions analyzed (13 percent). This year’s biggest gains were in Buffalo (25%) and Brownsville (13%) followed by Lakeland (17.8%) and Salt Lake City (17.7%). (up 11.7 percent).

Aside from Buffalo and Salt Lake City, the highest gains in buy originations from the third to fourth quarter of 2021 were Raleigh, NC (up 8.3%), Tucson, AZ (up 6.9%), and Baltimore, MD (up 6.9%). (up 4.9 percent).

In the fourth quarter of 2021, purchase loans accounted for the most mortgages in Oklahoma City (50.6 percent), Las Vegas (44.4 percent), Miami (44.2 percent), Virginia Beach (42.5 percent), and San Antonio (42.5 percent) (42.2 percent).

In the fourth quarter of 2021, purchase loans comprised the lowest share of all mortgages in Detroit (23.7%), Atlanta (26.3%), Boston (29.3%), Kansas City (29.9%), and Pittsburgh (29.9%). (32.1 percent).

Reporting style

ATDI reviewed recorded mortgage and deed of trust data for single-family houses, condominiums, townhomes, and two to four unit multi-family buildings. Each mortgage or trust deed recorded was a distinct loan origination. The dollar volume was derived by multiplying the total number of loans by the average loan amount.

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