IRVINE, Calif. — The total number of mortgages secured by residential property (one to four units) in the United States increased to 1.56 million during the second quarter of 2023.
While that remained down 38% from a year earlier, it was up 21 percent from the first quarter of 2023 – the first such increase in two years, according to Attom Data Solution’s residential property mortgage origination report.
The turnaround resulted from across-the-board quarterly increases of 13% to 29% in purchase, refinance and home-equity lending. Total activity rose after eight straight declines that had reduced lending by two-thirds. The increase was spurred, at least partly, by a resumption in the nation’s 11-year housing market boom, which had stalled from the middle of last year into early 2023.
Overall lending did remain down sharply during the second quarter compared to highs hit in 2021 right before rock-bottom mortgage rates doubled and inflation spiked, spurring a rise in economic uncertainty across the country, the report shows.
But even as interest rates ticked upward again during the second quarter of this year, overall home-mortgage activity included a 29% quarterly jump in loans granted to home purchasers, to almost 794,000, and a 14% increase in refinance packages, to 477,000. Home equity lines of credit, known as HELOCs, also went up in the second quarter of 2023, by 13 percent, to 285,000.
Lenders issued $494 billion worth of residential mortgages in the second quarter of 2023. That remained down annually by 41%, but up quarterly by 23%.
Although lending revived, the portion of all residential mortgages represented by different kinds of loans changed by smaller amounts. Purchase loans still comprised about half of all mortgages issued in the second quarter of 2023, with refinance packages making up almost one-third and home-equity loans just under 20%. That remained far different from two years ago, when refinance deals made up two-thirds of all activity and purchase loans just one-third, according to the report.
The second-quarter revival in mortgage activity came amid a combination of economic forces that created conditions for increases in the number of loans American households seek.
Home-mortgage rates were relatively stable, dipping back down in April toward 6% for a 30-year fixed-rate loan, before rising back up toward 7% by June. That followed a year when they had more than doubled from historically low levels under 3%.
At the same time, the Spring home-buying season heated up after a period when home prices had fallen from mid-2022 to early 2023, inflation was easing, and the stock market was improving. All that provided more financial resources and buying power for house hunters, leading to a 10% jump in the national median home price in the second quarter.
“Home buyers and owners alike lined back up again at the doors of mortgage lenders this spring seeking loans of all kinds,” Attom CEO Rob Barber said. “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.
“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.”
Total lending activity increases quarterly in more than 95% of nation
banks and other lenders issued a total of 1.5 million residential mortgages in the second quarter of 2023. That was up 20.8% from 1.2 million in first quarter of 2023, although still down 37.6% from 2.5 million in the second quarter of 2022. The revival followed a two-year slump that had reduced total lending numbers to almost their lowest point this century.
Despite the second-quarter turnaround, the latest total still was 63% less than the most recent high point of 4.1 million hit in early 2021. That gap reflected eight consecutive quarterly decreases before the recent gain — the longest run of drop-offs this century.
A total of $494.3 billion was lent in the second quarter of 2023, which was down 41.5% from $844.3 billion a year earlier, but up 23.5% from $400.3 billion in the first quarter of 2023.
Overall lending activity remained down annually in all 197 metropolitan statistical areas around the U.S. with a population of 200,000 or more and at least 1,000 total residential mortgages issued in the second quarter of 2023. However, it increased from the first quarter to the second quarter of 2023 in 192, or 97%, of those metro areas. Total lending activity rose at least 15% quarterly in 167 of those areas (85%).
The largest quarterly increases were in Knoxville, Tennessee (total lending up 109.4% from the first quarter of 2023 to the second quarter of 2023); Sioux Falls, South Dakota (up 49%); Rochester, Minnesota (up 48.6%); Des Moines, Iowa (up 45.4%) and Manchester, New Hampshire (up 44.4 percent).
Metro areas with a population of least 1 million that had the biggest increases in total loans from the first quarter to the second quarter of 2023 were Milwaukee, Wisconsin (up 39.8%); Chicago, (up 37.6%); Boston (up 32.1%); Cleveland, (up 32.1%) and San Jose, California (up 31.7%).
The only metro areas with a population of at least 1 million where total lending went down during from the first quarter of 2023 to the second quarter of 2023 were Buffalo, New York (down 39.2%) and St. Louis (down 9.1%).
Refinance mortgage originations rise after hitting low point this century
Lenders issued 477,219 residential refinance mortgages in the second quarter of 2023. That was down 51.1% from 975,997 in the second quarter of last year and remained 83% less than a peak of 2.7 million reached in early 2021. But the latest figure was up 13.8% from the low point this century of 419,261 hit in the prior quarter.
As with total lending, the number of refinance deals had dipped for eight straight quarters before turning back upward in the period running from April through June of this year.
The $141 billion volume of refinance packages in the second quarter of 2023 was still down 56.6% from $325 billion during the same period last year. But it was 7.9% above the $130.7 billion level in the first quarter of 2023.
Refinancing activity remained down the second quarter of last year to the same period this year in all, but one of the 197 metro areas around the U.S. with enough data to analyze. But it was up quarterly in 178, or 90%, of those metros.
