Mortgage originations saw a rate of 1.52 million in Q4 2022, down 24% from Q3, marking the seventh quarterly decrease in a row, and down 55% from Q4 2021, according to a new report from ATTOM.
ATTOM’s Residential Property Mortgage Origination Report for Q4 2022 found that 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, down quarterly by 27% and annually by 57%. Within the overall activity, there were 708,739 loans granted to home purchasers, down 26% from Q3 and down 45% from last year. The dollar volume of purchase mortgages dropped 28% quarterly and 44% annually, to $257 billion.
On the refinance side, the report found that only 496,221 mortgages were rolled over into new ones, down 27% quarterly, and down 73% annually. The dollar volume of refinance loans was down 27% from the prior quarter and 73% annually, to $158 billion. Even home-equity lending dropped by 16% to a total of 313,973. Banks and other lenders issued a total of 1,518,933 residential mortgages—the lowest number since Q1 2014. The latest figure was down 24.5% from 2,010,609 in Q3 2022 and down 55.2% from 3,390,801 in Q4 2021. The $475.5 billion dollar volume of loans was down 26.8% from $649.2 billion in Q3 and was 56.7% less than the $1.1 trillion lent last year.
Overall lending activity decreased in all 191 of the metro areas with a population of 200,000 or more and at least 1,000 total residential mortgages issued. 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, Hawaii (-47.7%); Knoxville, Tennessee (-47.6%); Buffalo, New York (-42.2%); Charleston, South Carolina (-40.1%) and Beaumont, Texas (-36.3%). The smallest decreases were in Tampa, Florida (-15.4%); Dallas, Texas (-15.5%); Orlando, Florida (-16.2%); Miami, Florida (-17.3%) and Baltimore, Maryland (-19.2%).
- Lenders issued 496,221 residential refinance mortgages–the smallest count since at least Q1 2000. The latest number was down 26.7% from 676,662 in Q3 and down 73.4% from 1,865,118 last year–the largest annual fall this century. It also was off 81.9% from a recent high of 2,744,363 in Q1 2021.
- The $157.9 billion dollar volume of refinance packages was down 27.2% from $217 billion in Q3 and down 73.5% from $595.3 billion last year.
- Refinancing activity decreased in 186, or 97%, of the 191 metro areas around the country with enough data to analyze. It was down annually in all 191 of those metros. Refinance lending dropped quarterly by at least 25% in 106 metro areas (55%).
- The largest quarterly decreases were in Madison, Wisconsin (-78.9%); Honolulu, Hawaii (-58.7%); Milwaukee, Wisconsin (-57.7%); Springfield, Illinois (-56.2%) and South Bend, Indiana (-52.6%).
- The only metro areas with sufficient data where the number of refinance loans increased were Peoria, Illinois (up 17%); Binghamton, New York (+15.6%); Dayton, Ohio (+6.1%); Ann Arbor, Michigan (+4.3%) and Atlantic City, New Jersey (+2.7%).
- Lenders originated 708,739 purchase mortgages. That was down 26.1% from 959,244 in Q3, and down 45% from 1,287,519 last year.
- The $257.5 billion dollar volume of purchase loans was down 28.4% from $359.9 billion in Q3 and 43.7% from $457 billion a year earlier.
- Residential purchase-mortgage originations decreased in 188 of the 191 metro areas in the report (98%) and dipped in the same number annually.
- The largest quarterly decreases were in Madison, Wisconsin (-57.7%); Honolulu, Hawaii (-53.9%); Knoxville, Tennessee (-50.4%); Lynchburg, Virginia (-48.2%) and Lafayette, Louisiana (-41.7%).
- The only metro areas among those analyzed where purchase-mortgage lending increased were Ocala, Florida (+12.7%); Port St. Lucie, Florida (+3.2%) and Naples, Florida (+0.4%).
- Mortgages backed by the Federal Housing Administration rose as a portion of all lending for the fifth straight quarter. They accounted for 181,324, or 11.9%, of all residential property loans originated. That was up from 11.3 percent in Q3 and 9.8% last year.
- Residential loans backed by the U.S. Department of Veterans Affairs totaled 80,061, or 5.3%, of all residential property loans originated. That was up from 5.2% in the previous quarter, although still down from 6% a year earlier.
“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 Rob Barber, chief executive officer at ATTOM. “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.”
“The severe contraction across the lending industry in the fourth quarter even hit HELOCs, which was the one major sector that had been holding up well earlier in the year as homeowners were using elevated equity from the real estate boom to finance home improvements and other things,” Barber said. “The direction of interest rates this year will dictate whether HELOC activity stays high as a portion of overall activity or households return to cash-out refinancing deals to help pay for big-ticket expenses.”
For the full report, click here.