Mortgage lenders across the country upped their purchase loan activity in the second quarter of the year even as refinances dropped substantially.
The industry issued more than 1.3 million new single-family purchase loans in the second quarter, a number 22 percent higher than the amount issued in the first three months of the year, according to Attom Data Solutions’ quarterly mortgage origination report.
Purchase loans also grew larger as the year progressed. Purchase loan values totaled more than $465 billion from April to June, a 31 percent increase over the previous quarter’s total.
These industry-wide results come on the heels of earnings reports from various lenders that showed a boom in purchase loans, even as institutions were hit by a 15 percent quarterly decline in the often more profitable refi business.
That divergence — a purchase loan boom combined with a downturn in refis — is a relatively unusual sight, Attom Chief Product Officer Todd Teta said in the report.
“We haven’t seen that pattern for several years,” Teta said in the statement. “The big increase in households looking to buy surely had a lot to do with that. And we may be getting to the point where so many homeowners have refinanced that the need for those deals is tapping out.”
In all, the number of loans originated dropped 3 percent in the second quarter, including purchase loans, refinanced loans and home-equity lines of credit.
The number of home-equity loans rose 18 percent in the second quarter to a total of 225,000. It was the first time in nearly two years that this category grew from one quarter to the next, according to Attom’s report.
These changes in the mortgage industry happened amid a sustained demand for homes during the pandemic, as well as interest rates that have at times dipped to historic lows, and remain near them.
Despite these low interest rates, however, borrowers are increasingly likely to put more down on their next home.
The median down payment on a residential property in the second quarter was $25,000 — significantly higher than the $18,500 median down payment from the previous quarter. This was 7.4 percent of the median sale price for a home purchased with a mortgage. Both measures were at their highest point since at least 2005, Attom said.
The data firm said the refinance boom in previous months, and its apparent decline in the second quarter of 2021, will be one of the stories to watch as time goes on.
With mortgage rates inching back up, it’s possible that the biggest group of homeowners who were planning to refinance have already done so, Attom’s report said.
“We will see whether this is a momentary blip or a real trend over the next few months, which looks to be a really key period for the lending industry,” Teta said in the statement.
