BAM Key Details:
- ATTOM released its U.S. Residential Property Mortgage Origination Report for Q1 2023, showing a 19% quarterly drop in the total number of residential loans—to its lowest point since 2000.
- Both refinance and purchase mortgage originations fell nearly 20% from the previous quarter, with refis down 85% year over year.
- Home equity lending also fell for the second quarter in a row.
The total number of residential mortgage loans dropped 19% in the first quarter of 2023, compared to the previous quarter—falling for the eighth consecutive quarter to its lowest point since 2000.
ATTOM released its U.S. Residential Property Mortgage Origination Report for Q1 2023, showing just 1.25 million mortgages originating—down 56% from Q1 2022 and down 70% from a peak reached in Q1 2021.
As mortgage rates hovered at roughly twice what they were last year, and the market grappled with economic uncertainty, residential lending activity continued its sharp decline—issuing $388 billion in residential mortgages in the first quarter, down 20% quarterly and 58% year over year.
Breakdown of key data points
The decline in mortgage lending activity impacted all types of residential property loans.
Here’s a quick breakdown of the latest ATTOM report:
- Residential mortgages for Q1 2023 totaled 1,248,280 loans—down 19.4% from Q4 2022, down 55.6% from Q1 2022, down 70% from the peak reached in early 2021, and the smallest total since the final quarter of 2000.
- The dollar value of the Q1 total reached $387.8 billion—down 19.8% from Q4 2022 and down 58% from Q1 2022.
- Overall purchase mortgage loan activity totaled 595,253 loans granted to home buyers in Q1 2023—down 19% from Q4 2022 and 44% from Q1 2022, falling to its lowest point since early 2014.
- The dollar volume of purchase mortgages slipped 18% from the previous quarter and 45% year over year to $216 billion.
- Only 407,956 refinance mortgages were issued in Q1 2023—the smallest number this century—down 18% from the previous quarter, down 73% year over year, and down 85% from Q1 2021.
- The dollar value of refinance packages was also down 21% on a quarterly basis and down 74% year over year, to $127 billion.
- Home equity lending was also down, falling 23% in the first quarter to a total of 245,071, the second quarterly decline after a year and a half of growth.
- Mortgages backed by the Federal Housing Administration (FHA) accounted for a larger portion of total mortgage activity, increasing its share for the sixth quarter in a row. FHA loans represented 12.9% of all residential mortgages in Q1 2023, up from 11.9% in Q4 2022 and 10.4% in Q1 2022.
- Mortgages backed by the U.S. Department of Veterans Affairs (VA) accounted for 5.5% of all residential property loans in Q1 2023, up from 5.3% in Q4 2022 and rising for the third consecutive quarter—but still down from 5.6% in Q1 2022.
- Purchase loans still comprised roughly half of all mortgages issued in Q1 2023, while refinance packages made up a third, and home equity loans accounted for 20%.
- That’s a change from two years ago, when refinance loans represented two-thirds of all mortgage loan activity and purchase loans only one-third.
Lenders saw opportunities dwindle even more during the first quarter as the longest slowdown in mortgage activity in at least 20 years continued. In one sense, it wasn’t that unusual, given that wintertime is usually the slow time of the year for lenders. But the latest slide extends a run that started two years ago and has carved away nearly three-quarters of the home-mortgage business. Things remain uncertain in the near future, with the potential for interest rates and inflation to go either way, but the Spring buying season will be a key indicator of whether things may turn around.
The ongoing quarterly slide in mortgage activity is largely due to a combination of the following economic forces—the same forces that halted the housing market boom and, in so doing, dealt a blow to the mortgage industry:
- Mortgage rates that doubled in 2022 and remain high
- Persistently high consumer price inflation
- Historically low inventory
- Widespread economic uncertainty
These forces have combined to make borrowing money—for purchase, refinance, or home equity loans—far less attractive to consumers, many of whom have altered their home buying or refinance plans as well as projects requiring a home equity loan.
Metro level changes in overall mortgage lending activity
Overall residential mortgage lending declined from the final quarter of 2022 to the first quarter of 2023 in 97% (167) of the 173 metro areas across the U.S. with populations of 200,000 or more and at least 1,000 total residential mortgage loans issued in Q1 2023.
Lending activity declined year over year in every one of these metros and fell at least 15% from the previous quarter in 109 of them.
The top five metros with the largest quarterly declines in overall mortgage loans:
- Buffalo, NY (total lending down 47.6% from Q4 2022 to Q1 2023)
- Albany, NY (down 46.4%)
- Toledo, OH (down 43.5%)
- Knoxville, TN (down 42.7%)
- St. Louis, MO (down 39.1%)
Aside from Buffalo and St. Louis, metros with populations of one million or more with the biggest quarterly declines in total loans were—
- Rochester, NY (down 34.7%)
- Minneapolis, MN (down 34.1%)
- Indianapolis, IN (down 32.5%)
No metros with populations of one million or more saw an increase in total mortgage lending from Q4 2022 to Q1 2023.
Among smaller metros that did, here are the top five with the largest quarterly increases in lending activity:
- Fort Myers FL (up 27.8%)
- Lakeland, FL (up 21%)
- Sarasota-Bradenton, FL (up 6.6%)
- Augusta, GA (up 6.1%)
- Montgomery, AL (up 1.6%)
Metro level refinance loan activity
In the first quarter of 2023, U.S. mortgage lenders issued just 407,956 residential refinance mortgage loans—hitting a new record low with the smallest number since at least 2000.
The most recent total was down 18.2% from 498,732 in Q4 2022, down 72.5% from 1,485,090 in Q1 2022, and down 85.2% from 2,749,578 in Q1 2021, falling for the eighth quarter in a row.
The total dollar value of those refinance loans reached $126.4 billion—down 20.7% from Q4 2022 and down 73.8% from Q1 2022.
Refinance lending activity declined from the previous quarter in 94% (163) of the 173 metro areas with sufficient data. It fell quarterly by a minimum 15% in 100 (58%) of them and fell year over year in all of them.
The top five metros with the steepest quarterly declines in refinance
- Ann Arbor, MI (refinance loans down 45.7% from Q4 2022 to Q1 2023)
- Albany, NY (down 43.3%)
- Toledo, OH (down 41.8%)
- Buffalo, NY (down 41.3%)
- Dayton, OH (down 40.7%)
Aside from Buffalo, metros with populations of one million or more that had the steepest declines in refinance activity were—
- Detroit, MI (down 33%)
- St. Louis, MO (down 30%)
- Minneapolis, MN (down 30%)
- Virginia Beach, VA (down 27.2%)
Top five metros with sufficient data that saw quarterly increases in refinance loan activity:
- Fort Myers, FL (up 30.6%)
- Honolulu, HI (up 19.7%)
- Amarillo, TX (up 11.9%)
- Eugene, OR (up 8%)
- El Paso, TX (up 5.5%)
Refinance packages accounted for 32.7% of all loans originated in Q1 2023—down slightly from 32.2% in Q4 2022 but well under the 52.8% in Q1 2022 and 66.2% in Q1 2021.
Metro-level purchase mortgage activity
Lenders issued 595,253 purchase mortgages in Q1 2023—down 18.6% from 731,083 in Q4 2022, down 44.3% from 1,067,746 in Q1 2022, and down 60% from a peak of 1,488,131 in Q2 2021. Loan originations dropped for the sixth quarter in a row.
The dollar volume of purchase mortgage loans in Q1 2023 was $215.7 billion—down 18% from $263 billion in Q4 2022 and 44.5% from $388.8 billion one year ago.
Residential purchase mortgage originations in the first quarter of 2023 declined from the previous quarter in 89% (154) of the metros in the ATTOM report. It also fell year over year in 99% of them.
The top five metros with the steepest quarterly declines in purchase mortgage originations:
- Buffalo, NY (purchase loans down 53.8%)
- Indianapolis, IN (down 46.5%)
- Anchorage, AK (down 45.4%)
- St. Louis, MO (down 45.4%)
- Rochester, NY (down 44.8%)
Aside from Buffalo, Indianapolis, St. Louis, and Rochester, the metro with a population of one million or more that saw the biggest decline was Minneapolis, MN (down 38.1%).
The top five metros with populations of one million or more that saw the biggest quarterly increases in purchase mortgages were—
- Tucson, AZ (up 16.9%)
- Tampa, FL (up 5.3%)
- Orlando, FL (up 4.8%)
- Detroit, MI (up 4%)
- Phoenix, AZ (up 3.7%)
Purchase mortgage loans accounted for 47.7% of all loan originations in the first three months of 2023—roughly the same as its 47.2% share in the previous quarter but significantly more than its 38% share in the first quarter of 2022 and 29.2% in early 2021.
HELOC lending dropped for second consecutive quarter
Lenders originated a total of 245,071 home equity lines of credit (HELOCs) on residential properties in Q1 2023. That figure is down 23.1% from 318,557 in the previous quarter, marking the second quarterly decline in a row after a series of upticks in the prior year and a half.
The latest total was also down 4.7% from 257,215 one year ago.
The total dollar volume of those HELOC loans reached $45.8 billion—down 25.3% from $61.3 billion in the final quarter of 2022 and down 11.9% from $51.9 billion in Q1 2022.
HELOCs accounted for 19.6% of all loans issued in the first quarter of 2023—down from 20.6% in the previous quarter but still four times its share in early 2021.
Home-equity borrowing had been the only thing even partly propping up the home-loan business in the past year as owners were taking advantage of rising equity to draw cash out of their properties for home improvements or other expenses or investments. Now, that also is clearly taking a hit.
HELOC mortgage originations declined from the previous quarter in 94% of the metros in ATTOM’s analysis.
The top five metros with populations of one million or more that saw the largest quarterly declines in HELOC lending:
- Buffalo, NY (home-equity credit lines down 43.7%)
- Rochester, NY (down 36.6%)
- St. Louis, MO (down 35.7%)
- Tulsa, OK (down 34.9%)
- Austin, TX (down 33.7%)
Not one metro area with a population of one million or more saw a quarterly increase in HELOCs.
Read the full report for more details, including the methodology.
Takeaways for real estate agents
If you’re having daily conversations with multiple lenders, you probably have a clearer idea than most of the agents in your area of how the numbers of different mortgage loans have changed from one quarter or one year to the next—as well as how many homeowners in your area are facing the possibility of foreclosure.
Get comfortable talking to industry professionals in your area to learn more about what they can do for your clients. And find out which are the most competent and trustworthy.