Across the U.S., 1.54 million mortgages secured by residential property (1 to 4 units) were issued in Q3 2023, representing a 3% decline from the prior three-month period, according to a new report from ATTOM. That drop-off marked the ninth decline in the last 10 quarters—a string broken only by a spike during Q2 2023.
ATTOM’s Residential Property Mortgage Origination Report for Q3 2023 found that banks and other lenders issued a total of 1,539,828 residential mortgages, down 3% from Q2. The fallback resumed a two-year run of declines that was broken only by a 22% spike in Q2. The latest total also was down 26% annually and 63% from the recent high point two years ago.
In addition, the report found that lenders issued $482 billion worth of residential mortgages, down 4% from Q2 and 28% from last year.
Key highlights:
- Overall lending activity dipped lower in 126 (63%) of the 201 metro areas that had a population of 200,000 or more and at least 1,000 total residential mortgages issued from July through September of 2023.
- Lenders issued 516,461 residential refinance mortgages, up 5% from 490,412 in the prior quarter, marking the second quarterly increase in a row. At the same time, though, the number of refinance packages remained down 25% from last quarter and was still 81% less than the peak reached in Q1 2021.
- The $151.8 billion dollar volume of refinance packages was up 4% from $145.4 billion in Q2. But it was still down 33% from the $225.8 billion level last year.
- Loans issued to home buyers resumed a downward path, dropping 7% following a spike of nearly 30% in Q2. Lenders originated 751,720 purchase mortgages, down from 807,729 in Q2.
- The latest number of purchase mortgages also was down 25% annually, and 50% from a peak reached in the Spring of 2021.
- The $283.1 billion dollar volume of purchase loans was down 8% from $306.8 billion in Q2, and 24% from $374.3 billion in Q3 2022.
- Home-equity lines of credit (HELOCs) also decreased, partly reversing a second quarter gain. Homeowners took out 271,647 HELOC loans, down 7% from Q2 and down 29% from a year earlier.
- The $47.5 billion volume of HELOC loans was down 9% from $52.1 billion in Q2. The latest level also was down 36% annually.
- HELOCs comprised 17.6% of all loans, down from 18.3% last quarter but still four times the level recorded in the early part of 2021.
- Mortgages backed by the Federal Housing Administration (FHA) rose as a percentage of all lending for the eighth straight quarter. They accounted for 233,975 (15.2%) of all residential property loans originated, up from 13.7% in Q2 and 11.3% in Q3 2022.
- Residential loans backed by the U.S. Department of Veterans Affairs (VA) totaled 75,334 (4.9%) of all residential property loans originated, down from 5.4% in Q2 and from 5.2% a year earlier.
Major takeaway:
“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, “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.”
For the full report, with specific metropolitan area data, click here.
