According to Attom Data Solutions’ most recent U.S. Residential Property Mortgage Origination Report, 3.59 million residential mortgages were originated in third-quarter 2021, marking the largest quarterly decrease in mortgage lending for more than a year.
Origination activity was down 8% from Q2 2021, a second straight quarterly decrease. Not only was it the first time in more than two years that mortgage lending dipped in two consecutive quarters, but it also was the first time since at least 2000 that originations fell in the second and third quarters — which are usually the peak homebuying months of the year.
“The overflow stack of work that was hitting lenders for several years shrank again in the third quarter across the U.S. amid a few emerging trends,” said Todd Teta, chief product officer for Attom Data.
“It looks more and more like homeowners’ voracious appetites for refinance deals has eased notably, while purchase lending also dipped. It’s still too early to say if the trends point to major shifts in lending patterns or the broader housing-market boom. But the drop-off is significant, especially for homebuying, which could suggest an impending housing-market slowdown. We will be watching the lending trends extra closely in the coming months.”
Purchase and refinance originations alike fell in the third quarter, according to Attom Data. Lenders issued 1.36 million purchase loans in Q3, down 2% quarter over quarter. On the refi side, 1.99 million loans were originated, down 13% compared to Q2 — the largest quarterly dip for refis in three years.
By dollar amount, lenders issued $1.15 trillion in mortgages in the third quarter, down 6% from Q2 2021. There were $624.1 billion in refinances originated in Q3, down 10% from the second quarter, while the dollar volume of purchase loans was at $482.6 billion (down 1% on a quarterly basis). With the refinance boom tapering, the refi share of the market remained in the majority, but it fell from 59% in Q3 to 55% in Q2.
Despite the quarterly cooling in origination activity, however, mortgage lending remained up compared to the same period in 2020. Total originations were up 3% from third-quarter 2020, with purchase loans up notably by 17%. Refinances, however, were down 3% from one year ago.