Fall in new mortgages, sparking fears of market slowdown – RISMedia

A significant drop in mortgage originations for the second quarter in a row worries industry insiders as borrowers appear to shy away from both refinancing and new purchase loans in what is traditionally a peak season, according to a new report from ATTOM Data Solutions.

After falling 3% in the second quarter of 2021, new mortgage originations fell 8% overall in the third quarter of this year. This is the first time in more than two years that the industry has experienced consecutive quarterly declines, and it is the largest quarterly decline in a year.

It was also the first time in two decades that mortgages had declined in the second and third quarters of the same year, which are generally the most popular times to buy a home.

“It is still too early to say whether the trends point to major changes in lending patterns or a broader housing market boom,” Todd Teta, director of products at ATTOM, said in a statement. “But the drop is significant, especially for home purchases, which could suggest an impending housing market slowdown.”

New loans dissipate

Perhaps most dramatic has been the decline in new purchase loans. While refinancing loans declined 13%, this corresponds to a 15% drop in the second quarter; it shows that many savvy homeowners have already taken advantage of insanely low interest rates.

New mortgage originations actually increased significantly in the second quarter, up 22% from the first quarter of 2021 and an increase of 52% from the second quarter of last year.

In the third quarter of this year, however, new mortgages actually fell 2% from the previous quarter, still up 17% from the third quarter of 2020, but a dramatic reversal of trends so far this year. year, as a boiling real estate market drove consumers to seek loans.

Teta added the second quarter in a row with a drop in refinancing that seems to confirm the findings of many analysts that homeowners no longer have the “voracious appetite” they had at the start of 2021 to cut rates, even though it does. remains uncertain.

“We will be monitoring lending trends more closely over the next few months,” he said.


Total dollar volume of loans also declined this quarter according to ATTOM data, down 6% from the previous quarter to $ 1.15 trillion.

Refinances also fell as an overall proportion of loans, from 59% in the previous quarter to 55%. The number of home equity loans increased overall by 2% this quarter, after increasing more than 17% in the previous quarter. This is the first time since 2019 that the industry has seen two consecutive quarterly increases in mortgage originations.

The median down payment continued to rise, reaching another high dating back to 2005. Borrowers invested an average of $ 27,000 on their home, up almost 6% from the previous quarter and up 41% from the previous quarter. % compared to the third quarter of 2020.

Jesse Williams is the Associate Online Editor of RISMedia. Send him your ideas for real estate news by email at [email protected].

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