In Q1 2023, 1.25 million mortgages secured by residential properties (1 to 4 units) were originated, down 19% from Q4 2022 and the eighth quarterly decrease in a row, according to a new report from ATTOM.
ATTOM’s Residential Property Mortgage Origination Report for Q1 2023 found that the 1.25 million mortgages was down 56% from Q1 2022, 70% from the peak in Q1 2021, and is the lowest point since late-2000. In addition, lenders issued just $388 billion worth of residential mortgages, down 20% quarterly and 58% annually. Overall activity included 595,253 loans, down 19% from Q4 2022 and 44% from Q1 2022. The dollar volume of purchase mortgages decreased to $216 billion, down 18% quarterly and 45% annually.
On the refinance side, the report found that only 407,956 mortgages were rolled over into new ones, down 18% quarterly, 73% annually and 85% from Q1 2021. The value of refinance packages was down to $127 billion, a drop of 21% from last quarter and 74% annually.
In terms of purchase mortgages, the report found that lenders originated 595,253, down 18.6% from Q4 2022. This represented the sixth drop in the last seven quarters, and was also off 44.3% from 1,067,746 a year earlier and 60 % from a peak of 1,488,131 in Q2 2021. The $215.7 billion dollar volume of purchase loans was down 18% from last quarter and 44.5% from a year earlier.
- Overall lending activity decreased quarterly and annually in 167, or 97%, of the 173 metro areas with a population of 200,000 or more and at least 1,000 total residential mortgages issued in Q1. Total lending activity dropped at least 15% quarterly in 109 of the metros with enough data to analyze (63%).
- The largest quarterly decreases were in Buffalo, New York (-47.6%); Albany, New York (-46.4%); Toledo, Ohio (down 43.5 percent); Knoxville, Tennessee (-42.7%) and St. Louis, Missouri (-39.1%).
- Metro areas with a population of at least 1 million that had the biggest decreases in total loans were Rochester, New York (-34.7%); Minneapolis, Minnesota (-34.1%) and Indianapolis, Indiana (-32.5%).
- No metro areas with a population of at least 1 million saw total lending rise. Smaller metro areas where lending did increase quarterly included Fort Myers, Florida (+27.8%); Lakeland, Florida (+21%); Sarasota-Bradenton, Florida (+6.6%); Augusta, Georgia (+6.1%) and Montgomery, Alabama (+1.6%).
- Refinancing activity decreased in 163, or 94%, of the 173 metro areas. It dropped quarterly by at least 15% in 100 of those metros (58%) and was down annually in all of them.
- The largest quarterly decreases were in Ann Arbor, Michigan (-45.7%); Albany, New York (-43.3%); Toledo, Ohio (-41.8%); Buffalo, New York (-41.3%) and Dayton, Ohio (-40.7%).
- Aside from Buffalo, metro areas with a population of least 1 million that had the biggest decreases in refinance activity were Detroit, Michigan (-33%); St. Louis, Missouri (-30%); Minneapolis, Minnesota (-30%) and Virginia Beach, Virginia (-27.2%).
- Metro areas where the number of refinance loans increased included Fort Myers, Florida (+30.6%); Honolulu, Hawaii (+19.7%); Amarillo, Texas (+11.9%); Eugene, Oregon (+8%) and El Paso, Texas (+5.5%).
- Refinance packages comprised just 32.7% of all loan originations, down slightly from 32.2% last quarter, but far less than 52.8% in Q1 2022 and 66.2% in Q1 2021.
- Residential purchase-mortgage originations decreased in 154 of the metro areas in the report (89%), and declined in 99% annually.
- The largest quarterly decreases were in Buffalo, New York (-53.8%); Indianapolis, Indiana (-46.5%); Anchorage, Arkansas (-45.4%); St. Louis, Missouri (-45.4%) and Rochester, New York (-44.8%). The biggest decrease in metro areas with a population of at least 1 million came in Minneapolis, Minnesota (-38.1%).
- The largest purchase-lending increases in metro areas with a population of at least 1 million were in Tucson, Arizona (+16.9%); Tampa, Florida (+5.3%); Orlando, Florida (+4.8%); Detroit, Michigan (+4%) and Phoenix, Arizona (+3.7%).
- Home-purchase loans comprised 47.7% of all loan originations, virtually the same as the 47.2% last quarter, but up from 38% last year and 29.2% in early 2021.
“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.”
Barber added, “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. Now, that also is clearly taking a hit.”
For the full report, click here.