MReport July 2022

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40 | M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION Mortgage Lending Plummets Nationwide in Q1 Amid a sharp decline in purchase and refinance activity, overall residential lending activity was also down 32% year over year, marking the fastest decline in eight years. A TTOM released its Q1 2022 U.S. Residential Property Mortgage Origination Report, with data showing that 2.71 million mortgages secured by residential property were origi- nated in Q1 of 2022 nationwide. That figure was down 18% from Q 4 of 2021—the largest quarterly decrease since 2017—and down 32% from Q1 of 2021, reflect- ing the biggest annual drop since 2014. The decline marked the fourth straight quarterly decrease, resulting from double- digit downturns in purchase and refinance activity, even as home-equity lending increased. Overall, lenders issued $892.4 billion worth of mortgages in Q1 of 2022. That was down quar- terly by 17% and annually by 27%. Regarding the number of loans, the quarterly and annual decreases in the dollar volume of loans were the largest in five and eight years. The biggest contributor to the downturn was a decrease in refinance deals. Just 1.45 million residential loans were rolled over into new mortgages during Q1 of 2022, down 22% from Q 4 of 2021 and 46% from a year earlier. Amid rising mortgage interest rates, the number of refinance mortgages decreased for the fourth straight quarter while the annual drop was the largest since 2014. The dollar volume of refinance loans was down 20% from the prior quarter and 42% annually, to $470.7 billion. Refinancing, while still a majority of residential lending activity, also decreased again as a portion of all loans during Q1 of 2022. They represented 53% of all first-quarter mortgages, down from 56% in Q 4 of 2021 and 67% in Q1 of 2021. "The drop-off in Q1 refinanc- ing activity is no surprise with mortgage rates rising as rapidly as they have," said Rick Sharga, EVP of Market Intelligence at ATTOM. "But many forecasts expected purchase loans to remain strong in 2022, and even increase in both the number of loans originated and the dollar volume of those loans. The weakness in purchase loan activity shows just how much of an impact the combina- tion of escalating home prices and rising interest rates have had on borrower activity this year." Purchase-loan activity shrank in Q1 of 2022 as lenders issued 1.01 million mortgages to buyers. That tally was down 18% quar- terly and 12% year over year. The dollar value of loans taken out to buy residential properties dipped to $371.3 billion, down 16% from Q 4 of last year and 1% from Q1 of 2021. Despite those decreases, purchase loans remained at 37% of all loans in Q1 of 2022 and were still up annually from 29%. In the one category that bucked the trend, home-equity lending went up 6% quarterly and 28% annually, to 249,900. So-called HELOC mortgages represented 9% of all first-quarter residential loans, up from 7% in the fourth quarter of 2021 and 5% in the first quarter of last year. The continued shrinkage in overall residential lending during the first quarter reinforced a stark reversal for the mortgage indus- try following a near-tripling of activity from early 2019 through early 2021. The first-quarter figures come amid multiple forces that threaten to continue the recent trends, including 30-year mortgage rates that have risen past 5% this year, an ongoing tight supply of homes for sale around the country that limits the number of home purchases, rising inflation and other uncertainties surround- ing the U.S. economy.

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