BAM Key Details:
- ATTOM has released its Q2 2023 U.S. Residential Property Mortgage Origination Report, showing the total number of mortgages for residential property (1-4 units) increased to 1.56 million—down 38% from Q2 2022 but up 21% from the previous quarter, marking the first such increase in two years.
- Total mortgage activity rose in Q2 with across-the-board quarterly increases of 13–29% for purchase, refinance, and home-equity lending—after eight consecutive quarters of decline that had reduced lending by two-thirds.
ATTOM has just released its Q2 2023 U.S. Residential Property Mortgage Origination Report, showing a 21% quarterly increase in total residential mortgages after eight consecutive quarterly declines.
The total number of residential mortgages rose to 1.56 million in the second quarter. And while that’s down 38% from a year ago, that 21% quarterly increase is the first in two years. And it came at a time when mortgage rates were climbing.
ATTOM’s report credits a “resumption of the nation’s 11-year housing market boom,” which had gone on hiatus from the middle of 2022 through early 2023.
Overall lending in the second quarter did remain low compared to the highs reached in 2021—right before record-low mortgage rates doubled and soaring inflation triggered economic uncertainty across the U.S.
But even as mortgage rates climbed in the second quarter, purchase mortgages jumped by 29% to nearly 794,000, and refinance packages increased by 14% to 477,000. Home equity lines of credit (HELOCs) also rose by 13% to 285,000.
The value of residential mortgages issued in the second quarter totaled $494.3 billion—down by 41.5% from a year ago ($844.3 B) but up 23.5% from the previous quarter ($400.3 B).
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. Buyers also might have jumped back in amid worries about even more rate increases that could have priced them out of a new home.”
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.
Mortgage activity increased in 97% of the 197 metros analyzed
In 97% of the 197 metro areas analyzed, overall mortgage lending activity increased from the first quarter of 2023 to the second. In all 197 metros, mortgage lending dropped year over year.
The five metros with the largest quarterly increase in total residential mortgage lending:
- Knoxville, TN (total lending went up 109.4% from Q1 2023 to Q2 2023)
- Sioux Falls, SD (up 49%)
- Rochester, MN (up 48.6%)
- Des Moines, IA (up 45.4%)
- Manchester, NH (up 44.4%)
The only metros with populations of one million or more where total lending declined from Q1 2023 to Q2 were Buffalo, NY (down 39.2%) and St. Louis, MO (down 9.1%).
Refinance mortgages rose 13.8% from the low point of the century
Refinance mortgage originations rose 13.8% from the previous quarter’s low for the century (419,261). Lenders issued 477,219 refinance mortgages in Q2 2023, down 51.1% from 975,997 in Q2 2022 and down 83% from the peak of 2,743,700 set in early 2021.
Metros with the largest quarterly increases in refinance mortgages were led by—
- Knoxville, TN (refinance loans went up 87.4% from Q1 2023 to Q2)
- Sioux Falls, SD (up 47.2%)
- Duluth, MN (up 45.7%)
- Manchester, NH (up 45.2%)
- Beaumont, TX (up 41.7%)
The five metros with populations of one million or more that saw a decline in the number of refinance loans from Q1 2023 to Q2:
- Buffalo, NY (down 36.7%)
- Honolulu, HI (down 33.8%)
- St. Louis, MO (down 20.9%)
- Louisville, KY (down 15.2%)
- Grand Rapids, MI (down 1.4%
Refinance packages accounted for 30.7% of all mortgage loan originations in the second quarter of 2023, up from the previous quarter’s 32.6% but still 39.1% below its share for Q2 2023 and well under its 65.8% share in the first quarter of 2021.
Purchase mortgages went up by nearly 30%
Mortgage lenders issued 793,659 purchase mortgages in Q2 2023, down 31.8% from a year earlier (1,164,284) and 47.6% below the peak of 1,515,922 reached in Q2 2021.
But the Q2 total for purchase mortgages was 28.8% higher than the previous quarter’s 616,206, rising after seven consecutive quarterly declines.
The dollar volume of purchase mortgages in Q2 2023 was $302.4 billion—down 32.9% from a year ago ($450.4 B) but up 35.9% from the previous quarter’s $222.5 billion.
The five metros with the largest quarterly increases in purchase mortgage loans:
- Knoxville, TN (up 116.8%)
- Honolulu, HI (up 84.4%)
- Madison, WI (up 84.4%)
- Ann Arbor, MI (up 68.3%)
- Utica, NY (up 67.3%)
The only metros with populations of at least one million where purchase mortgage loans declined from Q1 2023 to Q2 were Buffalo, NY (down 30.9%) and St. Louis, MO (down 0.3%).
Home purchase loans accounted for 51% of all mortgage loan originations in Q2 2023—up from 47.9% in the previous quarter, 46.7% in Q2 2022, and 29.7% in early 2021.
Home equity lending increases after two consecutive quarterly declines
Lenders originated a total of 284,591 home-equity lines of credit (HELOCs) in Q2 2023—down 19.5% from a year ago but up 12.9% from the previous quarter’s 251,975,
The total volume of those HELOCs in the second quarter reached $50.9 billion—down 26.2% year over year but up 8% from the previous quarter’s $47.1 billion.
HELOCs accounted for 18.3% of all mortgage loans in the second quarter of 2023, down from 19.6% in the previous quarter but still four times its share from the early part of 2021.
FHA loan portions increase; VA loans hold steady
Home mortgages backed by the Federal Housing Administration (FHA) increased as a share of all lending for the seventh consecutive quarter. FHA loans accounted for 213,944 or 13.8% of all residential property mortgage loans originated in Q2 2023. That share was up from the previous quarter’s 12.9% and from its 10.7% share in Q2 2022.
Mortgage loans backed by the U.S. Department of Veterans Affairs (VA) accounted for 84,917 or 5.5% of all residential property loans originated in Q2 2023—roughly the same as the previous quarter but up from its 5.1% share in Q2 2022.
Purchase loan amounts and down payment percentages rose
Nationwide, the median loan amount for a single-family home was $324,000—up 6.6% from the previous quarter’s $303,875 but still down 2.3% year over year from $331,500.
The median down payment of $31,500 on single-family homes and condos financed in Q2 2023 was 19.1% higher than the previous quarter’s $26,450. That’s not surprising given the steady rise of home prices in most of the U.S. But the typical down payment has also increased as a percentage of the median sale price.
In the second quarter of 2023, the typical down payment was 8.3% of the median sale price—up from 7.6% in the first quarter, but still down from 10.1% in Q2 2022.
Read the full ATTOM report for more information.
Takeaways for real estate agents
We know higher mortgage rates have priced out many buyers and caused quite a few homeowners locked into (much) lower mortgage rates to postpone their plans to sell. But for some buyers—those still able to afford a mortgage—the less competitive environment has improved their chances of getting the home they want.
As mortgage rates drop to their lowest in three weeks, buyers in your area may start looking for properties meeting their criteria. And homeowners looking to sell may put out some feelers.
At any point in a conversation with a potential client, you need to be able to articulate what’s going on in the market and what it means for them. To that end, don’t miss a single episode of the daily Hot Sheet, streaming live every weekday at 9:30 am ET. Get the industry’s only daily dose of the latest news, real estate-specific stocks, mortgage rates, housing indexes, and more.