Mortgage lending continued to decline across the United States in the second quarter due to a sharp decline in refinancing activity.
August 25, 2022, IRVINE, Calif. /PRNewswire/ — In the second quarter of 2022, 2.39 million mortgages secured by residential property (1 to 4 units) were generated in the United States, according to ATTOM, a major curator of real estate data nationally for land and property data, which released its report today. This statistic was down 40% from the second quarter of 2021, the greatest yearly decline since 2014, and down 13% from the first quarter of 2022, the fifth consecutive quarterly decline.
The fall was caused by a second double-digit decline in refinance activity, which exceeded improvements in lending for house purchases and home equity.
Mortgages of $807.8 billion were granted by lenders in the second quarter of 2022. This was down yearly by 35% and down quarterly by 11%. The yearly decline in the dollar amount of loans, like the number of loans, was the biggest in eight years.
According to Rick Sharga, executive vice president of market intelligence at ATTOM, “mortgage rates that have practically quadrupled over the past year have wrecked the refinance market and are starting to take a toll on purchase lending as well.” “The idea of owning a house has become simply unaffordable for many potential purchasers due to the combination of substantially higher mortgage rates and growing property prices, which threatens to push loan volume down even more as we leave the spring and summer months.”
Just 941,000 home loans were converted into new mortgages during the second quarter of 2022, a decrease of 60% from the first quarter and 36% from the previous year. This represents a decline in overall activity. Refinance lending fell for the sixth consecutive quarter amid an increase in mortgage interest rates, reaching a level that was just one-third of what it had been in early 2021. The dollar amount of refinancing loans fell to $310.1 billion, a 56 percent annual decline and a reduction of 35% from the previous quarter.
Refinance activity fell to 39 percent of all loans in the second quarter, not representing the largest portion of mortgages for the first time since early 2019. That was down from a peak of 66 percent in early 2021 and from the first quarter’s 53 percent.
While this was happening, the volume of purchase loans climbed somewhat as the spring 2022 housing market began to heat up. Despite continuous increases in property prices, there were 1.1 million purchase loans outstanding as of the end of the third quarter, accounting for 46% of total borrowing. However, that increase was exceptionally modest for the period from April to June, resulting in a 21 percent yearly decline in the number of buy mortgages. Loans for residential property purchases totaled $431.4 billion, a rise of 15% from the first quarter of this year but a decline of 12% from the second quarter of last year.
Home equity financing once again had the strongest performance in the second quarter. Home equity lines of credit soared to 341,704 and increased by 35% quarterly and 44% yearly.