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M R EP O RT | 41 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 They also add to a list of indi- cators showing that the nation's decade-long housing market boom may be cooling off, including slower price growth, smaller home-seller profits, and declining home affordability. Overall lend- ing activity decreased from Q 4 of 2021 to Q1 of 2022 in 213—or 99%— of the 216 metropolitan statistical areas around the United States with a population of more than 200,000 and at least 1,000 total residential mortgages issued in Q1 of 2022. Total lending activity was down at least 10% in 183 metros and down by at least 20% in 90 metros. The largest quarterly decreases were in: • Huntsville, Alabama (-62%) • Louis, Missouri (-52.2%) • Augusta, Georgia (-40.8%) • Montgomery, Alabama (-37.4%) • Des Moines, Iowa (-35.8%) Excluding St. Louis, metro areas with a population of least 1 million that had the biggest decreases in total loans from Q 4 of 2021 to Q1 of 2022 were in: San Jose, California (-34.1%); Boston (-31.5); Minneapolis (-30.4%); and Rochester, New York (-29.6%). Key Findings • Lenders issued 1,446,622 resi- dential refinance mortgages in Q1 of 2022, down 21.7% from 1,846,450 in Q 4 of 2021 and down 45.8% from 2,670,304 in Q1 of 2021. • Totals were down for the fourth straight quarter, which had not happened since late 2013 into early 2014. • The $470.7 billion dollar volume of refinance packages in Q1 of 2022 was down 19.9% from $587.5 billion in the prior quar- ter and down 42.1% from $813.1 billion in Q1 of 2021. • Refinancing activity decreased from Q 4 of 2021 to Q1 of 2022 in 210—or 97%—of the 216 metropolitan statistical areas analyzed. • Activity dropped at least 10% in 193 metro areas (89%) and by at least 20% in 109 metros (50%). • Lenders originated 1,011,975 purchase mortgages in Q1 of 2022. That was down 18.3% from 1,238,432 in Q 4, and down 11.7% from 1,145,767 in Q1 of 2021. • The $371.3 billion dollar volume of purchase loans in Q1 of 2022 was down 16.2% from $443 billion in the prior quarter, al- though off just 0.8% from $374.4 billion a year earlier. • Residential purchase-mortgage originations decreased from Q 4 of 2021 to Q1 of 2022 in 205 of the 216 metro areas in the report (95%). • Loans issued to buyers dropped at least 10% in 169 metro areas (78%) and by at least 20% in 113 metros (52%). "With affordability apparently slowing down demand from move- up homebuyers, we're likely to see a continuing increase in HELOCs and cash-out refinance loans, as those homeowners tap into the record $27 trillion of equity to make improvements in their current properties," Sharga said. Mortgages backed by the Federal Housing Administration (FHA) rose as a portion of all lending for the third time in the last four quarters, accounting for 281,306, or 10.4%, of all residential property loans originated in Q1 of 2022. That was up from 9.8% in Q4 of 2021 and from 8.9% in Q1 of 2021. The national median down pay- ment on homes purchased with financing again decreased slightly during Q1 of 2022—the second straight quarterly drop-off—while the typical amount borrowed rose for the fourth quarter in a row, to another new high. The median down payment on single-family homes and condos purchased with financing in Q1 of 2022 was $25,200, down 3.1% from $26,000 in the previous quarter but still up 24.4% from $20,250 in Q1 of 2021. Among homes purchased with financing in Q1 of 2022, the median loan amount was $295,075. That was up 0.7% from the prior quarter and up 11% from the same period in 2021. Amid those shifts, the typical down payment was 7.2% of the purchase price, down from 7.4% in Q 4 of 2021. YoY Mortgage Contract Activity Slips in Major Regions While the housing market remains unbalanced nationwide, with demand far outpacing supply, contract signings are down significantly from a year ago due to inflated mortgage rates. P ending home sales inched higher in May, ending a six-month streak of declines, according to the National Association of Realtors (NAR). Regionally, month-over- month results were mixed as the Northeast and South experienced increases while the Midwest and West posted decreases. Year-over- year contract activity slid in all four major regions. The Pending Home Sales Index (PHSI) edged up 0.7% to 99.9 in May. Year over year, transactions dropped 13.6%. An index of 100 is equal to the level of contract activity in 2001. "Despite the small gain in pending sales from the prior month, the housing market is clearly undergoing a transition," NAR Chief Economist Lawrence Yun said. "Contract signings are down sizably from a year ago because of much higher mort- gage rates." According to NAR, at the median single-family home price and with a 10% down payment, the monthly mortgage payment has increased by about $800 since the beginning of the year as mortgage rates have climbed by 2.5 percentage points since January. "Trying to balance the housing market by choking off demand via higher mortgage rates is damaging to consumers and the economy," Yun added. "The bet- ter way to balance the market is through increased supply, which also helps the broader economy." While the housing market remains unbalanced nationwide with demand far outpacing supply, Yun noted variations in home prices and affordability contributed to the regional dif- ferences in pending sales activity in May. "The largest decline in con- tract activity was observed in the West region, where homes are the most expensive," he said. "This further indicates the growing need to increase supply to tame home price growth and improve the chances of owner- ship for potential home buyers." May Pending Home Sales Regional Breakdown The Northeast PHSI jumped 15.4% compared to last month to 86.7, down 11.9% from May 2021. The Midwest index retreated 1.7% to 98.6 in May, a decline of 8.8% from a year ago. The South PHSI increased 0.2% to 119.0 in May, a 13.8% drop from the previous year. The West index contracted 5.0% in May to 81.6, down 19.8% from May 2021.