ATTOM’s Q2 2022 U.S. Residential Property Mortgage Origination Report shows that 2.39 million mortgages secured by residential property (1-4 units) were originated in the second quarter of 2022 in the United States. That figure was down 13% from the first quarter of 2022 – the fifth quarterly decrease in a row – and down 40% from the second quarter of 2021 – the biggest annual drop since 2014.
The decline resulted from another double-digit downturn in refinance activity that more than outweighed increases in home-purchase and home-equity lending.
Overall, lenders issued $807.8 billion worth of mortgages in the second quarter of 2022. That was down quarterly by 11% and annually by 35%. As with the number of loans, the annual decrease in the dollar volume of loans marked the largest in eight years.
“Mortgage rates that have virtually doubled over the past year have decimated the refinance market and are starting to take a toll on purchase lending as well,” comments Rick Sharga, executive vice president of market intelligence at ATTOM. “The combination of much higher mortgage rates and rising home prices has made the notion of homebuying simply unaffordable for many prospective buyers, which threatens to drive loan volume down even further as we exit the spring and summer months.”
The downturn in total activity resulted from just 941,000 residential loans getting rolled over into new mortgages during the second quarter of 2022 – a figure that was down 36% from the first quarter of 2022 and down 60% from a year earlier. Amid another rise in mortgage interest rates, refinance lending decreased for the fifth straight quarter, hitting a point that was just one-third of what it was in early 2021. The dollar volume of refinance loans was down 35% from the prior quarter and 56% annually, to $310.1 billion.
For the first time since early 2019, refinance activity in the second quarter did not represent the largest chunk of mortgages, dropping to 39% of all loans. That was off from 53% in the first quarter and from a recent peak of 66% in early 2021.
Purchase-loan activity, meanwhile, increased modestly as the 2022 spring home-buying season kicked into gear. Despite ongoing home-price spikes, the number of purchase loans rose 8% quarterly, to 1.1 million, representing 46% of all borrowing. Still, that gain was unusually small for the months running from April through June and left the number of purchase mortgages down 21% annually. The dollar volume of loans taken out to buy residential properties rose to $431.4 billion, up 15% from the first quarter of this year, but still down 12% from the second quarter of last year.
The best-performing category by far in the second quarter was again home-equity lending. Home Equity Lines of Credit shot up 35% quarterly and 44% annually, to 341,704.
“Borrowers looking to tap into their equity should know that HELOC activity has been particularly strong among credit unions and community banks, along with a small but growing number of depository banks,” Sharga notes. “While non-bank mortgage lenders may begin to more aggressively originate home equity loans, it’s not likely they’ll be active participants in the HELOC market.”
The latest loan trends reflected a housing market in flux, pushed by competing forces, and continued a sharp break from a period when lending activity nearly tripled from early 2019 through early 2021.
Banks and other lenders issued 2,385,051 residential mortgages in the second quarter of 2022. That was down 13.2% from 2,747,324 in the first quarter of 2022 and down 40% from 3,976,656 in the second quarter of 2021. The annual decline marked the largest since the first quarter of 2014. The $807.8 billion dollar volume of loans in the second quarter was down 10.6% from $903.7 billion in the prior quarter and was 35% less than the $1.24 trillion lent in the second quarter of 2021.
Overall lending activity decreased from the first quarter to the second quarter of 2022 in 173, or 80%, 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 second quarter of 2022. Total lending activity was down at least 10% in 97 metros (45%). The largest quarterly decreases were in Knoxville, Tenn. (down 59.9%); Roanoke, Va. (down 52.7%); Charleston, S.C. (down 37%); St. Louis, Mo. (down 28.7%); and Philadelphia, Pa. (down 27.3%).
Aside from St. Louis and Philadelphia, metro areas with a population of least 1 million that had the biggest decreases in total loans from the first quarter to the second quarter of 2022 were New York, N.Y. (down 25.9%); Detroit, Mich. (down 25.6%); and San Jose, Calif. (down 24.7%).
The biggest increases in the total number of mortgages from the first quarter to the second quarter of 2022 were in Atlantic City, N.J. (up 32.5%); Erie, Pa. (up 18.8%); Peoria, Ill. (up 17.4%); Topeka, Kan. (up 15.6%); and Utica, N.Y. (up 14.6%).
The only metro areas with a population of at least 1 million where total loan originations increased from the first to the second quarter were Honolulu, Hawaii (up 9.9%); Kansas City, Mo. (up 3.4%); and Rochester, N.Y. (up 3.2%).
Lenders issued 941,111 residential refinance mortgages in the second quarter of 2022 – the smallest count since the second quarter of 2019.
The latest number was down 35.9% from 1,469,237 in first quarter of 2022 and 59.7% from 2,335,808 in the second quarter of 2021. The $310.1 billion dollar volume of refinance loans in the second quarter of 2022 was down 35.1% from $477.5 billion in the prior quarter and down 56.1% from $706.2 billion in the second quarter of 2021.
Refinancing activity decreased from the first quarter to the second quarter of 2022 in 213, or 99%, of the 215 metropolitan statistical areas around the country with enough data to analyze. Activity dropped quarterly by at least 25% in 162 metro areas (75%) and at least 35% in 94 metros (44%). The largest quarterly decreases were in Roanoke, Va. (down 65.8%); Knoxville, Tenn. (down 64.4%); San Jose, Calif. (down 58.5%); Oxnard, Calif. (down 56.3%); and Charleston, S.C. (down 55.3%).
Aside from San Jose, metro areas with a population of least 1 million that had the biggest decreases in refinance activity from the first quarter to the second quarter of this year were Portland, Ore. (down 53.2%); San Francisco, Calif. (down 52.9%); Sacramento, Calif. (down 51.8%); and Chicago, Ill. (down 49.8%).
The only metro areas where refinance lending increased from the first quarter to the second quarter were Atlantic, City, N.J. (up 23.7%) as well as Utica, N.Y. (up 8.5%).
Lenders originated 1,102,236 purchase mortgages in the second quarter of 2022. That was up 7.6% from 1,024,109 in the first quarter. But the increase was the smallest second-quarter gain since at least 2000. As a result, purchase lending remained down 21.5% from 1,403,287 in the second quarter of 2021. The $431.4 billion dollar volume of purchase loans in the second quarter of 2022 was up 15.1% from $374.9 billion in the prior quarter, but down 11.8% from $489.2 billion a year earlier.
Residential purchase-mortgage originations increased from the first quarter of 2022 to the second quarter of 2022 in 173 of the 215 metro areas in the report (80%) but were still down annually in 194 metro areas (90%).
The largest quarterly increases were in Madison, Wisc. (up 60.8%); Honolulu, Hawaii (up 55.8%); Lafayette, Ind. (up 55.5%); Champaign, Ill. (up 52.6%); and Jackson, Miss. (up 49.3%).
Aside from Honolulu, metro areas with a population of at least 1 million that saw the biggest quarterly increases in purchase originations in the second quarter of 2022 were Boston, Mass. (up 41.7%); Seattle, Wash. (up 33.6%); Richmond, Va. (up 31.9%); and Birmingham, Ala. (up 29.9%).
Residential purchase-mortgage lending decreased most from the first quarter to the second quarter of 2022 in Knoxville, Tenn. (down 52%); Roanoke, Va. (down 37.3%); Salinas, Calif. (down 18.1%); Ogden, Utah (down 16.9%); and Boise, Idaho (down 13.6%).
Metro areas with a population of at least 1 million where purchase originations decreased most from the first to the second quarter of 2022 were New York, N.Y. (down 12%); Los Angeles, Calif. (down 11%); St. Louis, Mo. (down 10.7%); Philadelphia, Pa. (down 10.7%); and Detroit, Mich. (down 9.5%).
A total of 341,704 home-equity lines of credit (HELOCs) were originated on residential properties in the second quarter of 2022, up 34.5% from 253,978 during the prior quarter and up 43.8% from 237,561 in the second quarter of 2021. HELOC activity increased for the fourth time in five quarters after decreasing in each of the prior six quarters. The $66.3 billion second-quarter 2022 volume of HELOC loans was up 29.4% from $51.2 billion in the first quarter of 2022 and 39.8% from $47.4 billion in the second quarter of last year, hitting the highest point in almost three years.
HELOCs comprised 14.3% of all second-quarter 2022 loans, more than double the 6% level from a year earlier.
HELOC mortgage originations increased from the first quarter to the second quarter of 2022 in 94% of the metro areas analyzed. The largest increases in metro areas with a population of at least 1 million were in Fresno, Calif. (up 82.9%); Riverside, Calif. (up 80.9%); Buffalo, N.Y. (up 53.2%); San Diego, Calif. (up 52%); and Los Angeles, Calif. (up 51.5%).
The only quarterly decrease in HELOCs among metro areas with a population of at least 1 million was in St. Louis, Mo. (down 11.7%).
Mortgages backed by the Federal Housing Administration (FHA) rose as a portion of all lending for the third straight quarter, accounting for 255,544, or 10.7%, of all residential property loans originated in the second quarter of 2022. That was up from 10.4% in the first quarter of 2022 and 9.6% in the second quarter of 2021.
Residential loans backed by the U.S. Department of Veterans Affairs (VA) accounted for 122,483, or 5.1%, of all residential property loans originated in the second quarter of 2022, down from 5.6% in the previous quarter and 6.8% a year earlier. VA lending as a portion of all loans dropped for the seventh straight quarter.
The national median down payment on homes purchased with financing increased during the second quarter of 2022 after declining in the prior two quarters, while the typical amount borrowed rose to another new high. At the same time, the ratio of median down payments to home prices went up.
The median down payment on single-family homes and condos purchased with financing in the second quarter of 2022 increased to $35,000, up 34.7% from $25,980 in the previous quarter and up 34.6% from $26,000 in the second quarter of 2021. Among homes purchased with financing in the second quarter of 2022, the median loan amount was $320,000. That was up 8.1% from the prior quarter and up 12.3% from the same period in 2021.
The typical down payment in the second quarter of this year represented 9.1% of the purchase price, up from 7.4% in the prior quarter and 7.5% a year earlier.
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