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Residential Loans Drop 3 Percent After Brief Second-Quarter Surge; Purchase and Home-Equity Lending Both Down 7 Percent Following Earlier Gains; But Refinance Activity Rises for Second Straight Quarter ATTOM, a leading curator of land, property, and real estate data, released its third-quarter 2023 U.S. Residential Property Mortgage Origination Report, which shows that 1.54 million mortgages secured by residential property (1 to 4 units) were issued in the United States during the third quarter, representing a 3 percent decline from the prior three-month period. That drop-off marked the ninth decline in the last 10 quarters – a string broken only by a spike during the second quarter of this year. The third-quarter downturn, which came amid increases in mortgage rates and home prices, left total residential lending activity down 26 percent from a year earlier and 63 percent from a high point hit in 2021. Lending activity resumed its extended downturn during the third quarter with a mix of gains and losses in major categories of residential lending, as growth in refinance activity was more than offset by drops in purchase and home-equity lending. The number of refinanced loans increased 5 percent quarterly, to roughly 516,500, while lending to home buyers went down 7 percent, to about 752,000. Home-equity credit lines also dipped 7 percent, to 272,000. Measured monetarily, lenders issued $482 billion worth of residential mortgages in the third quarter of 2023. That was down 4 percent from the second quarter of 2023 and 28 percent from the third quarter of last year. Despite the third-quarter shifts, the portion of all residential mortgages represented by different kinds of loans remained roughly the same compared to the second quarter. Purchase loans still comprised about half of all mortgages issued during the third quarter, while refinance packages made up one-third and home-equity loans just under 20 percent. However, that remained far different from two years ago, when refinance deals comprised two-thirds of all activity and purchase loans just a third. “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 that “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.” The third-quarter lending trends took shape as hHome-mortgage rates increased again over the Summer, pushing up the cost of borrowing after dipping slightly in the first and second quarters of 2023. Average rates for 30-year, fixed loans rose above 7 percent, which was more than double the historically low rates from two years earlier. At the same time, an ongoing tight supply of properties for sale across the U.S. helped keep a lid on the number of buyers seeking mortgages to purchase homes. Total lending activity decreases quarterly in almost two-thirds of nation Banks and other lenders issued a total of 1,539,828 residential mortgages in the third quarter of 2023, down 3 percent from 1,589,359 in the second quarter of 2023. The fallback resumed a two-year run of declines that was broken only by a 22 percent spike in the second quarter of this year. The latest total also was down annually by 26 percent, from 2,077,214 in the third quarter of 2022, and 63 percent from a recent high point of 4,167,003 hit two years ago. A total of $482.5 billion was lent to homeowners and buyers in the third quarter, which was down 4 percent from $504.3 billion in the prior quarter and down 28 percent from $674.1 billion in the third quarter of 2022. Overall lending activity dipped lower from the second to the third quarter of this year in 126, or 63 percent, of the 201 metropolitan statistical areas around the U.S. that had a population of 200,000 or more and at least 1,000 total residential mortgages issued from July through September of 2023. Total lending also remained down from the third quarter of 2022 in 195, or 97 percent, of the metro areas analyzed. It was off by at least 25 percent annually in 98 of those markets (49 percent). The largest quarterly decreases were in St. Louis, MO (total lending down 33.7 percent from the second quarter of 2023 to the third quarter of 2023); Atlanta, GA (down 24.3 percent); Naples, FL (down 17.6 percent); Salisbury, MD (down 17.4 percent) and Barnstable, MA (down 15 percent). Aside from St. Louis and Atlanta, metro areas with a population of least 1 million that had the biggest decreases in total loans from the second quarter of 2023 to the third quarter of 2023 were San Jose, CA (down 12.6 percent); Washington, DC (down 11 percent) and San Francisco, CA (down 10.9 percent). The biggest quarterly increases among metro areas with a population of at least 1 million came in Buffalo, NY (total lending up 15.2 percent from the second to the third quarter of 2023); Grand Rapids MI (up 9.8 percent); Honolulu, HI (up 7.9 percent); New York, NY (up 6.2 percent) and Detroit, MI (up 5.6 percent). Refinance mortgage originations rise for second straight quarter after two-year fall Lenders issued 516,461 residential refinance mortgages in the third quarter of 2023. That was up 5 percent from 490,412 in the prior quarter, marking the second quarterly increase in a row since loan rollovers hit a low point this century in early 2023. At the same time, though, the number of refinance packages remained down 25 percent from 692,113 in the third quarter of 2022 and
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