Attom’s third-quarter 2023 U.S. Residential Property Mortgage Origination Report revealed that 1.54 million residential mortgages for one- to four-unit properties were issued from July through September, down 3% from the previous quarter.
It’s the ninth decrease in the past 10 quarters, with the market in turmoil due to heightened mortgage rates and a dearth of resale listings that have driven home prices up despite a paucity of sales. Only a surge of originations during the second quarter of this year snapped the streak of declines.
“The mortgage industry took another hit in the third quarter as the spike in residential lending during the spring turned out to be temporary,” Attom CEO Rob Barber said. “Refinance deals stood out as the lone bright spot. That seemed a bit odd given that interest rates went up but may have stemmed from homeowners pulling cash out of their growing equity.
“Overall, the impact of higher rates and other forces working against borrowers remained striking, resulting in total loan activity still off by a remarkable two-thirds over just two years.”
With third-quarter results factored in, total residential activity is down 26% year over year and 63% from the recent peak in 2021, when the post-pandemic housing boom was in full swing. Notably, refinance activity showed some signs of life, increasing 5% from Q2 to Q3 to approximately 516,500 originations — the second straight quarterly jump in refis. Purchase lending, which has dominated the cycle since mortgage rates started to rise, slid by 7% and had roughly 752,000 originations during the third quarter. Home equity credit lines also decreased by 7% to 272,000 originations.
Nevertheless, purchase loans still comprise the lion’s share of lending, taking up roughly half of all mortgages originated in the third quarter. Refinances accounted for about one-third of originations, with home equity loans taking up about 20%.
On a dollar volume basis, $482.5 billion in residential mortgages were issued in the third quarter, down 4% from $504.3 billion in Q2 2023 and down 28% from $674.1 billion in Q3 2022. The third quarter of this year saw $151.8 billion in refinances, up 4% from $145.4 billion in the prior quarter but down 33% from $225.8 billion in Q3 2022. Purchase loans saw $283.1 billion in issuances in the third quarter, down 8% from Q2 2023 and 24% below the level of Q3 2022.
