HOME-MORTGAGE LENDING REVIVES ACROSS U.S. IN THE SECOND QUARTER OF 2023

News provided by

Aug 31, 2023, 00:01 ET

Residential Loans Up 21 Percent Following Eight Straight Quarterly Declines;
Purchase Lending Leads the Way, Spiking 29 Percent;
Refinance and Home-Equity Activity Also Rise

IRVINE, Calif., Aug. 31, 2023 /PRNewswire/ -- ATTOM, a leading curator of land, property, and real estate data, today released its second-quarter 2023 U.S. Residential Property Mortgage Origination Report, which shows that the total number of mortgages secured by residential property (1 to 4 units) in the United States increased to 1.56 million during the second quarter of 2023. While that remained down 38 percent from a year earlier, it was up 21 percent from the first quarter of 2023 - the first such increase in two years.

The turnaround resulted from across-the-board quarterly increases of 13 percent to 29 percent in purchase, refinance and home-equity lending. Total activity rose after eight straight declines that had reduced lending by two-thirds. The increase was spurred, at least partly, by a resumption in the nation's 11-year housing market boom, which had stalled from the middle of last year into early 2023.

Overall lending did remain down sharply during the second quarter compared to highs hit in 2021 right before rock-bottom mortgage rates doubled and inflation spiked, spurring a rise in economic uncertainty across the country. But even as interest rates ticked upward again during the second quarter of this year, overall home-mortgage activity included a 29 percent quarterly jump in loans granted to home purchasers, to almost 794,000, and a 14 percent increase in refinance packages, to 477,000. Home equity lines of credit, known as HELOCs, also went up in the second quarter of 2023, by 13 percent, to 285,000.

Lenders issued $494 billion worth of residential mortgages in the second quarter of 2023. That remained down annually by 41 percent, but up quarterly by 23 percent.

While lending revived, the portion of all residential mortgages represented by different kinds of loans changed by smaller amounts. Purchase loans still comprised about half of all mortgages issued in the second quarter of 2023, with refinance packages making up almost one-third and home-equity loans just under 20 percent. That remained far different from two years ago, when refinance deals made up two-thirds of all activity and purchase loans just one-third.

The second-quarter revival in mortgage activity came amid a combination of economic forces that created conditions for increases in the number of loans American households seek.

Home-mortgage rates were relatively stable, dipping back down in April toward 6 percent for a 30-year fixed-rate loan, before rising back up toward 7 percent by June. That followed a year when they had more than doubled from historically low levels under 3 percent.

At the same time, the Spring home-buying season heated up after a period when home prices had fallen from mid-2022 to early 2023, inflation was easing, and the stock market was improving. All that provided more financial resources and buying power for house hunters, leading to a 10 percent jump in the national median home price in the second quarter.

"Home buyers and owners alike lined back up again at the doors of mortgage lenders this Spring seeking loans of all kinds. It looks like owners took advantage of the small rate drop to refinance existing loans, while a jump in mortgages for purchasers was likely fueled by a number of forces that pushed the overall housing market to heat back up during the Spring buying season," said Rob Barber, CEO at ATTOM. "Buyers also might have jumped back in amid worries about even more rate increases that could have price them out of a new home."

Barber added that, "Lenders certainly aren't anywhere near as busy as they were back in 2021. And the second quarter surge could be just a momentary thing. But the upturn was significant, and a testimony to how strong the housing market remains around the country."

Total lending activity increases quarterly in more than 95 percent of nation
Banks and other lenders issued a total of 1,555,469 residential mortgages in the second quarter of 2023. That was up 20.8 percent from 1,287,442 in first quarter of 2023, although still down 37.6 percent from 2,493,790 in the second quarter of 2022. The revival followed a two-year slump that had reduced total lending numbers to almost their lowest point this century.

Despite the second-quarter turnaround, the latest total still was 63 percent less than the most recent high point of 4,171,212 hit in early 2021. That gap reflected eight consecutive quarterly decreases before the recent gain - the longest run of drop-offs this century.

A total of $494.3 billion was lent in the second quarter of 2023, which was down 41.5 percent from $844.3 billion a year earlier, but up 23.5 percent from $400.3 billion in the first quarter of 2023.

Overall lending activity remained down annually in all 197 metropolitan statistical areas around the U.S. with a population of 200,000 or more and at least 1,000 total residential mortgages issued in the second quarter of 2023. However, it increased from the first quarter to the second quarter of 2023 in 192, or 97 percent, of those metro areas. Total lending activity rose at least 15 percent quarterly in 167 of those areas (85 percent).

The largest quarterly increases were in Knoxville, TN (total lending up 109.4 percent from the first quarter of 2023 to the second quarter of 2023); Sioux Falls, SD (up 49 percent); Rochester, MN (up 48.6 percent); Des Moines, IA (up 45.4 percent) and Manchester, NH (up 44.4 percent).

Metro areas with a population of least 1 million that had the biggest increases in total loans from the first quarter to the second quarter of 2023 were Milwaukee, WI (up 39.8 percent); Chicago, IL (up 37.6 percent); Boston, MA (up 32.1 percent); Cleveland, OH (up 32.1 percent) and San Jose, CA (up 31.7 percent).

The only metro areas with a population of at least 1 million where total lending went down during from the first quarter of 2023 to the second quarter of 2023 were Buffalo, NY (down 39.2 percent) and St. Louis, MO (down 9.1 percent).

Refinance mortgage originations rise after hitting low point this century
Lenders issued 477,219 residential refinance mortgages in the second quarter of 2023. That was down 51.1 percent from 975,997 in the second quarter of last year and remained 83 percent less than a peak of 2,743,700 reached in early 2021. But the latest figure was up 13.8 percent from the low point this century of 419,261 hit in the prior quarter.

As with total lending, the number of refinance deals had dipped for eight straight quarters before turning back upward in the period running from April through June of this year.

The $141 billion dollar volume of refinance packages in the second quarter of 2023 was still down 56.6 percent from $325 billion during the same period last year. But it was 7.9 percent above the $130.7 billion level in the first quarter of 2023.

Refinancing activity remained down the second quarter of last year to the same period this year in all but one of the 197 metro areas around the U.S. with enough data to analyze. But it was up quarterly in 178, or 90 percent, of those metros.

The largest quarterly increases were in Knoxville, TN (refinance loans up 87.4 percent from the first quarter to the second quarter of 2023); Sioux Falls, SD (up 47.2 percent); Duluth, MN (up 45.7 percent); Manchester, NH (up 45.2 percent) and Beaumont, TX (up 41.7 percent).

Metro areas with a population of least 1 million where refinance activity increased most from the first quarter to the second quarter of 2023 were Kansas City, MO (up 33.3 percent); Virginia Beach, VA (up 24.3 percent); Sacramento, CA (up 23.7 percent); Providence, RI (up 22.5 percent) and Rochester, NY (up 21.8 percent).

The only metro areas with a population of least 1 million and a decline in number of refinance loans from the first quarter to the second quarter of 2023, were Buffalo, NY (down 36.7 percent); Honolulu, HI (down 33.8 percent); St. Louis, MO (down 20.9 percent); Louisville, KY (down 15.2 percent) and Grand Rapids, MI (down 1.4 percent).

Refinance packages comprised 30.7 percent of all loan originations in the second quarter of 2023, up from 32.6 percent in the prior quarter, but still down from 39.1 percent in the second quarter of 2022 and far less than the 65.8 percent portion in the first quarter of 2021.

Purchase mortgages soar almost 30 percent
Lenders originated 793,659 purchase mortgages in the second quarter of 2023. That was down 31.8 percent from 1,164,284 a year earlier and 47.6 percent from a peak of 1,515,922 in the second quarter of 2021. But the second-quarter number was up 28.8 percent from 616,206 in the first quarter of 2023, following seven straight quarterly declines.

The $302.4 billion dollar volume of purchase loans in the second quarter of 2023 remained down 32.9 percent from $450.4 billion a year earlier, but was 35.9 percent more than the $222.5 billion figure in the first quarter of this year.

While residential purchase-mortgage originations decreased annually in the second quarter of 2023 in 187 of the 197 metro areas in the report (95 percent), they were up quarterly in 193 (98 percent).

The largest quarterly increases were in Knoxville, TN (purchase loans up 116.8 percent); Honolulu, HI (up 84.4 percent); Madison, WI (up 84.4 percent); Ann Arbor, MI (up 68.3 percent) and Utica, NY (up 67.3 percent).

Aside from Honolulu, the biggest quarterly increases in metro areas with a population of at least 1 million in the second quarter of 2023 came in San Jose, CA (up 56.1 percent); Boston, MA (up 55.7 percent); Milwaukee, WI (up 55.3 percent) and Indianapolis, IN (up 50.8 percent).

The only decreases in purchase lending from the first quarter of 2023 to the second quarter of 2023 in metro areas with a population of at least 1 million, were in Buffalo, NY (down 30.9 percent) and St. Louis, MO (down 0.3 percent).

Home-purchase loans comprised 51 percent of all loan originations in the second quarter of 2023, up from 47.9 percent in the prior quarter, 46.7 percent in the second quarter of 2022 and 29.7 percent in early 2021.

HELOC lending rises after two straight declines
A total of 284,591 home-equity lines of credit (HELOCs) were originated on residential properties in the second quarter of 2023. While that figure was down 19.5 percent annually, it was up 12.9 percent from 251,975 in the prior quarter. The increase came after two consecutive quarterly declines.

The $50.9 billion volume of HELOC loans in the second quarter of 2023 remained down 26.2 percent year over year, but was up 8 percent from $47.1 billion in the first quarter of 2023.

HELOCs comprised 18.3 percent of all loans in the most recent quarter. That was down from 19.6 percent in the prior quarter, but still four times the level in the early part of 2021.

HELOC mortgage originations increased from the first quarter of 2023 to the second quarter of 2023 in 79 percent of the metro areas analyzed. The largest increases in metro areas with a population of at least 1 million were in Grand Rapids, MI (home-equity credit lines up 48.9 percent); Rochester, NY (up 47.6 percent); Milwaukee, WI (up 38.4 percent); Birmingham, AL (up 33.6 percent) and Minneapolis, MN (up 32.9 percent).

The largest quarterly decreases in HELOC activity in metro areas with a population of at least 1 million and sufficient data to analyze came in Buffalo, NY (down 49.2 percent); Austin, TX (down 12.7 percent); St. Louis, MO (down 10.8 percent); San Antonio, TX (down 8.6 percent) and Washington, DC (down 6.5 percent).

FHA loan portions go up while VA lending holds steady
Mortgages backed by the Federal Housing Administration (FHA) rose as a portion of all lending for the seventh straight quarter. They accounted for 213,944, or 13.8 percent, of all residential property loans originated in the second quarter of 2023. That was up from 12.9 percent in the first quarter of 2023 and 10.7 percent in the second quarter of 2022.

Residential loans backed by the U.S. Department of Veterans Affairs (VA) totaled 84,917, or 5.5 percent, of all residential property loans originated in the second quarter of 2023. That was the same portion as in the previous quarter, although still up from 5.1 percent a year earlier.

Purchase loan and down-payment percentages increase
The second quarter of 2023 saw increases nationwide in both the median single-family home loan and the typical down payment percentage for home purchases in the second quarter of 2023.

Among homes purchased with financing in the second quarter of 2023, the median loan amount was $324,000. That was up 6.6 percent from $303,875 in the prior quarter, although still down annually by 2.3 percent, from $331,500.

The median down payment of $31,500 on single-family homes and condos purchased with financing in the second quarter of 2023 was up 19.1 percent from $26,450 in the first quarter of 2023. With home prices rising in most of the country, the typical down payment also increased as a percentage of the median purchase price. It represented 8.3 percent of the median price in the second quarter of 2023, which was up from 7.6 percent in the prior quarter, although still down from 10.1 percent a year earlier.

Report methodology
ATTOM analyzed recorded mortgage and deed of trust data for single-family homes, condos, town homes and multi-family properties of two to four units for this report. Each recorded mortgage or deed of trust was counted as a separate loan origination. Dollar volume was calculated by multiplying the total number of loan originations by the average loan amount for those loan originations.

About ATTOM
ATTOM provides premium property data to power products that improve transparency, innovation, efficiency, and disruption in a data-driven economy. ATTOM multi-sources property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, and neighborhood data for more than 155 million U.S. residential and commercial properties covering 99 percent of the nation's population. A rigorous data management process involving more than 20 steps validates, standardizes, and enhances the real estate data collected by ATTOM, assigning each property record with a persistent, unique ID — the ATTOM ID. The 30TB ATTOM Data Warehouse fuels innovation in many industries including mortgage, real estate, insurance, marketing, government and more through flexible data delivery solutions that include bulk file licenses, property data APIs, real estate market trends, property navigator and more. Also, introducing our newest innovative solution, that offers immediate access and streamlines data management – ATTOM Cloud.