Lending activity fell in the first quarter

A report found that overall residential lending fell 32% between the first quarters of 2021 and 2022, with refinance lending falling 22% and mortgage lending down 18%.

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Mortgages fell in the United States during the first quarter of 2022, marking the fastest year-over-year decline in eight years, as mortgage rates climbed to 5%, according to a new report released Thursday. by real estate data curator Attom. .

It found that overall residential lending fell 32% between the first quarters of 2021 and 2022, with refinance lending falling 22% and mortgage lending 18%.

The most important factor behind the fall was a decline in refinancing deals, according to Attom, which found that only 1.45 million residential loans had been converted into new mortgages in the first three months of 2022, a decrease of 46% compared to the same period of 2021 and a decrease of 22% compared to the fourth quarter of 2021.

The decline in refinancing was expected with rising mortgage rates, but experts were caught off guard by the sharp drop in loans to purchase – which fell 12% a year and 18% quarterly, lenders n having granted only 1.01 million mortgages to buyers.

“The decline in refinancing activity in the first quarter is no surprise, with mortgage rates rising as quickly as they have,” said Rick Sharga, executive vice president of market intelligence at Atom, in a statement. “But many forecasts predicted that purchase loans would remain strong in 2022, and even increase both the number of loans made and the dollar volume of those loans. The weakness in purchase loan activity shows how much the combination of rising house prices and rising interest rates has impacted borrower activity this year.

Rick Sharga | Photo credit: Atom Data Solutions

The value of loans taken out for home purchases fell to $371.3 billion, down 16% from the fourth quarter and down 1% year-on-year.

One area that bucked the trend was home loans, which rose 6% quarterly and 28% annually according to Attom, as more homeowners took advantage of soaring home valuations. .

The decline in residential loans represents a sharp turnaround for the sector, which saw its activity nearly triple between the start of 2019 and the start of 2021, the report notes. The forces behind the slowdown – high mortgage rates and record house prices – are poised to continue to hit the market, suggesting the trend will continue.

The drop in lending activity itself is another sign that the US housing market is finally calming down, as more and more buyers find themselves locked out of home ownership.

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