ATTOM: Mortgage Lending Declines Again in 3Q as Rates Rise

ATTOM, Irvine, Calif., said 1.54 million mortgages secured by residential property (1 to 4 units) were issued during the third quarter, a 3 percent decline from the prior three-month period.

The 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 ATTOM third-quarter U.S. Residential Property Mortgage Origination Report said the third-quarter downturn, which came amid increases in mortgage rates and home prices, left total residential lending activity down 26% from a year earlier and 63% 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,” ATTOM reported. The number of refinanced loans increased 5% quarterly to roughly 516,500, while lending to home buyers went down 7% to about 752,000. Home-equity credit lines also dipped 7% to 272,000.

“The mortgage industry took another hit in the third quarter as the spike in residential lending during the Spring turned out to be temporary,” ATTOM CEO Rob Barber said. “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.”