Home loan activity falls at fastest pace in 3 years

Lending activity fell 11%, the fastest rate of decline since 2019, according to Attom Data Solutions. Refinancing, purchase and home equity mortgages declined in the fourth quarter of 2021.

The rapid pace of home lending between 2019 and 2021 is now over, at least temporarily, according to the latest mortgage lending report for the last three months of last year.

According to a report by Attom Data SolutionsNationwide real estate data custodian for land and real estate data.

The drop in activity is likely due to a few trends happening at the same time, including homeowners refinancing before rates began to rise rapidly from record highs. The lack of inventory over the past two years has also driven up prices and depressed purchases.

“The decline in business volume for the residential mortgage industry is now showing across all major loan categories and appears to be more than just a temporary decline,” said Todd Teta, chief product officer at Attom, in a statement. communicated. “The downward wave of refinancing [loans] which began in early 2021 has fully expanded into home buying and home equity loans.

Lending remains above historic levels of the past decade, and researchers said the decline in activity stems from a convergence of trends and a lack of supply rather than a slowdown in demand .

Residential mortgages fell 13% year over year. Refinance activity was down 23% from a year ago and accounted for 55% of all mortgages in the quarter, compared to 62% for the same period in 2020. HELOC loans were down 5, 5% from the third to the fourth quarter.

Lending activity fell from the third to fourth quarters in 91% of 215 U.S. metro areas with at least 200,000 people and at least 1,000 total residential mortgages issued in the fourth quarter.

The biggest drops

  • Provo, Utah (down 54.3%)
  • Huntsville, Alabama (down 53.9%)
  • Hickory-Lenoir, North Carolina (down 48.5%)
  • Pittsburgh, Pennsylvania (down 43.8%)
  • Peoria, Illinois (down 40.9%)

Third to fourth quarter 2021

The biggest increases

  • Buffalo, NY (up 25%)
  • Utica, NY (up 13.6%)
  • Hilton Head, SC (up 11.6%)
  • Shreveport, LA (up 8.2%)
  • New Orleans, LA (up 6.8%)

Third to fourth quarter 2021

“There is no doubt that total lending levels are still higher than normal amounts over the past decade,” Teta said. “The decline in purchase loans appears to stem from a lack of housing supply rather than the end of the property market boom.”

“But the decline in business for lenders remains a key point to watch in assessing the state of the market,” he added, “particularly with interest rates likely to climb this year.”

The slowdown came at a time when homes were appreciating faster than before. at any time recorded. Prices rose 18.8% last year, according to the S&P CoreLogic Case-Shiller Index. This compares to a 10.4% increase in 2020.

While forecasters had predicted an increase in supply to start 2022, it didn’t happen. Existing home inventory fell to a new low of 860,000, about 1.6 months off the monthly pace of sales. This pace was down from 1.7 months in December 2021 and 1.9 months in January 2021.

Among homes purchased with financing in the fourth quarter of 2021, the median loan amount was $293,400. This represents an increase of 1.3% compared to the previous quarter and 10.5% compared to the same period in 2020.

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