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Overall Loan Activity Down 11 Percent Lending Down at Fastest Rate Since Early 2019 Refinance, Purchase, Home-Equity Mortgages All Down Quarterly ATTOM, a leading curator of real estate data nationwide for land and property data, released its fourth-quarter 2021 U.S. Residential Property Mortgage Origination Report, which shows that 3.27 million mortgages secured by residential property (1 to 4 units) were originated in the fourth quarter of 2021 in the United States. That figure was down 11 percent from the third quarter of 2021 and 13 percent from the fourth quarter of 2020. The total number of mortgages issued was down for the third quarter in a row while the annual decrease marked the largest since late 2018. The overall drop-off resulted from across-the-board quarterly declines in all three categories of conventional loans – purchase, refinance and home-equity. Only purchases lending remained up from a year earlier. Overall, lenders issued $1.06 trillion worth of mortgages in the fourth quarter of 2021. That was down quarterly by 9 percent and annually by 7 percent. Both decreases in the dollar volume of loans were the largest since the early part of 2019. On the refinance side, 1.81 million home loans were rolled over into new mortgages during the fourth quarter of 2021, a figure that was down 11 percent from the third quarter and 23 percent from a year earlier. The total number of refinance mortgages decreased for the third straight quarter while the annual drop was the largest in three years. The dollar volume of refinance loans was down 9 percent from the third quarter of 2021 and 18 percent annually, to $578 billion. Refinance mortgages, while still a majority of residential lending activity, decreased again as a portion of all loans during the fourth quarter of 2021. They represented 55 percent of all fourth-quarter mortgages, down from 56 percent in the third quarter of 2021 and 62 percent in the fourth quarter of 2020. The number of purchase loans also declined in the fourth quarter of 2021 as lenders issued 1.22 million mortgages to buyers. That was down 11 percent quarterly, although still up annually by 3 percent. The dollar value of loans taken out to buy houses and condominiums dipped to $439 billion, down 10 percent from the third quarter of last year but still up 14 percent from the fourth quarter of 2020. As a portion of all lending, purchase loans slipped from 38 percent in the third quarter of 2021 to 37 percent in the fourth quarter 2021, while still up annually from 32 percent. Home-equity lending also dropped quarterly, by 5 percent, to about 230,700, although that number represented a slight increase in the total portion of all loans. The decrease in all three mortgage categories during the fourth quarter, as well as the third straight drop in total lending, represented another sign that the near-tripling of lending activity from 2019 through 2021 has ended, at least temporarily. The latest numbers likely reflect several trends coming together at the same time. They include homeowner appetite for refinance loans finally getting satisfied and mortgage rates ticking upward. In addition, a tight supply of homes for sale throughout the Coronavirus pandemic has helped drive prices up but purchases down. “The receding volume of business for the residential mortgage industry is now showing up across all major categories of loans and appears to be more than just a temporary slide. The ebbing wave of refinance loan that started in early 2021 has fully spread to home-purchase and home-equity lending,” said Todd Teta, chief product officer at ATTOM. “No doubt, total lending levels are still up over normal amounts over the past decade. And the drop-off in purchase loans seems to flow from a lack of housing supply rather than the housing market boom ending. But declining business for lenders remains a key point to watch in assessing the state of the market, especially with interest rates likely to climb this year.” Total mortgages drop at fastest pace in three yearsBanks and other lenders issued 3,266,907 residential mortgages in the fourth quarter of 2021. That was down 10.7 percent from 3,656,892 in third quarter of 2021 and down 13.5 percent from 3,775,894 in the fourth quarter of 2020. The quarterly and annual declines were the largest since the first quarter of 2019 or the fourth quarter of 2018, respectively. The latest total also was 18.1 percent less than the peak hit in the first quarter of 2021. The $1.06 trillion dollar volume of all loans in the fourth quarter was down 9 percent from $1.17 trillion in the prior quarter and 6.5 percent less than the $1.14 trillion lent in the fourth quarter of 2020. Overall lending activity decreased from the third quarter of 2021 to the fourth quarter of 2021 in 195, or 91 percent, of the 215 metropolitan statistical areas around the U.S. with a population of more than 200,000 and at least 1,000 total residential mortgages issued in the fourth quarter. Total lending activity was down at least 5 percent in 163 metros (76 percent). The largest quarterly decreases were in Provo, UT (down 54.3 percent); Huntsville, AL (down 53.9 percent); Hickory-Lenoir, NC (down 48.5 percent); Pittsburgh, PA (down 43.8 percent) and Peoria, IL (down 40.9 percent). Aside from Pittsburgh, metro areas with a population of least 1 million that had the biggest decreases in total loans from the third to the fourth quarter of 2021 were St. Louis, MO (down 22.1 percent); San Jose, CA (down 19.6 percent); Birmingham, AL (down 17.4 percent) and Chicago, IL (down 17.1 percent). Metro areas with the biggest increases in the total number of mortgages from the third to the fourth quarter of 2021 were Buffalo, NY (up 25 percent); Utica, NY (up 13.6 percent); Hilton Head, SC (up 11.6 percent); Shreveport, LA (up 8.2 percent) and New Orleans, LA (up 6.8 percent). Aside from Buffalo and New Orleans, the only metro areas with a population of at least 1 million and an increase in total mortgages from the third quarter to the fourth quarter of 2021 were Raleigh, NC (up 2.7 percent); Baltimore, MD (up 2.4 percent) and Cleveland, OH (up 1.1 percent). Refinance mortgage originations down 11 percent from third quarterLenders issued 1,812,512 residential refinance mortgages in the
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