Q1 Woes: Residential Lending Fell To More Than 20-Year Low


A report released on Thursday shows that residential lending continues to slow across the United States.

According to ATTOM’s first-quarter 2023 U.S. Residential Property Mortgage Origination Report, 1.25 million mortgages were originated in Q1. That number was down 19% from Q4 2022.

“Lenders saw opportunities dwindle even more during the first quarter as the longest slowdown in mortgage activity in at least 20 years continued,” Rob Barber, chief executive officer at ATTOM, said in a statement. “In one sense, it wasn’t that unusual, given that wintertime is usually the slow time of the year for lenders. But the latest slide extends a run that started two years ago and has carved away nearly three-quarters of the home-mortgage business.”

A downturn in both purchase loan and refinance activity, as well as a drop-off in home equity lending, are being blamed for the decline in residential lending.

$387.8 billion was lent in the first quarter, down 19.8% from $483.7 billion in the prior quarter and 58% lower than $923.8 billion in Q1 2022, according to ATTOM’s team.

407,956 mortgages were rolled over into new ones through refinancing. That was down 18% quarterly, 73% annually, and 85% from Q1 2021.

Home-equity lending dropped 23% in Q1 2023, to a total of 245,071, according to ATTOM’s team.

“Home-equity borrowing had been the only thing even partly propping up the home-loan business in the past year as owners were taking advantage of rising equity to draw cash out of their properties for home improvements or other expenses or investments,” Barber said. “Now, that also is clearly taking a hit.”

To come up with these numbers, recorded mortgage and deed of trust data for single-family homes, condos, townhomes, and multi-family properties of two to four units was analyzed.

Barber said the spring buying season will be key to see if things turn around.

Sellers and buyers are having a hard time as the market continues to cool.

A first-quarter 2023 U.S. Home Sales Report released in April by ATTOM showed that on median-priced single-family home and condo sales across the country, profit margins dipped to 44.2%, sagging from 48.7% in the fourth quarter of last year.

And a new survey from Clever Real Estate found more than half of Americans who recently bought a home feel that they overpaid for their purchase and have struggled financially since.

Lenders can help home shoppers make informed choices by emphasizing upfront research on what they value most, like neighborhoods, amenities, and school districts, as the everyday expenses of homeownership can add up to $14,155 a year, according to a new Zillow and Thumbtack analysis.

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