Residential mortgage lending in the second quarter of 2022 declined at its fastest pace in eight years, according to new data from ATTOM, a curator of real estate data.

2.39 million residential property mortgages were originated in the second quarter, marking the fifth consecutive quarterly decline. This figure is down 13% from the previous quarter and down 40% from last year.

The dip in total activity, despite a moderate uptick in purchase loan activity, is attributed to a massive reduction in refinancing activity, which also decreased for the fifth consecutive quarter.

Just 941,000 residential loans were rolled over into new mortgages during the second quarter, the lowest level in three years, according to the report. This figure marks a 36% drop from the previous quarter and a 60% tumble from last year.

The Numbers:

• Banks and other lenders issued 2,385,051 residential mortgages in the second quarter of 2022, which is down 13% from last quarter and 40% from last year.
• Lenders issued just under 1 million residential refinance mortgages in the second quarter of 2022—the smallest count since the second quarter of 2019.
• A total of 341,704 home equity lines of credit (HELOCs) were originated on residential properties in the second quarter, up 34.5% from the prior quarter and up 43.8% from last year.
• Mortgages backed by the FHA rose as a portion of all lending for the third straight quarter, accounting for 10.7% of all residential property loans originated in the second quarter of 2022.
• The national median down payment on homes purchased with financing increased during the second quarter of 2022 after declining in the prior two quarters, while the typical amount borrowed rose to another new high.

The Bottom Line:

“Mortgage rates that have virtually doubled over the past year have decimated the refinance market and are starting to take a toll on purchase lending as well,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “The combination of much higher mortgage rates and rising home prices has made the notion of homebuying simply unaffordable for many prospective buyers, which threatens to drive loan volume down even further as we exit the spring and summer months.

“Borrowers looking to tap into their equity should know that HELOC activity has been particularly strong among credit unions and community banks, along with a small but growing number of depository banks,” Sharga noted. “While non-bank mortgage lenders may begin to more aggressively originate home equity loans, it’s not likely that they’ll be active participants in the HELOC market.”