Mortgage Lending Experiences Second Consecutive Quarterly Decline

According to ATTOM, a real estate data solutions company, mortgage lending has dropped in both Q2 and Q3 of 2021. Finance mortgages dropped -13% and purchase loads were down -2% for the first time in this century. ATTOM’s Q3 2021 U.S. Residential Property Mortgage Origination Report reveals that 59 million mortgages secured by residential properties were developed in Q3. Those figures were up 3% from Q3 of 2020, but down -8% from the Q2 of 2021. This amounted to the largest quarterly decline in over a year.

ATTOM noted that the quarterly decrease showcased a couple of “unusual patterns developing in the lending industry.” This shift represented the first time in over two years that total lending decreased across two consecutive quarters. Moreover, this was also the first time since 2000 that lending activity declined in both Q2 and Q3. That runs counter to the standard pattern for Q2 and Q3, which ATTOM notes are usually “peak buying seasons.”

In comments prepared to accompany the Q3 Mortgage Origination Report, Todd Teta, ATTOM’s Chief Production Officer said, “It looks more and more like homeowner’s 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.” Teta added, “We will be watching the lending trends closely in the coming months.”

The spike came as interest rates dropped to historic lows along with the Coronavirus pandemic, spurring a rush of home buying among households looking for larger spaces and safety measured offered by a house and yard space. The rapid increase in buying drove home prices to record highs.