Mortgage originations have taken a steep dive, and it may not be a temporary glitch. The total number of mortgages issued fell for the third quarter in a row. The annual decrease marks the largest since late 2018, according to the fourth-quarter 2021 U.S. Residential Property Mortgage Origination Report from ATTOM. 

Both quarterly and annual declines hit double digits and represented the largest disparity since the first quarter of 2019 and the fourth quarter of 2018 respectively. 

In Q3, 2021, 3,656,892 residential mortgages were originated. By Q4, that number dropped to 3,266,907 — a decline of 10.7%. One year prior, in Q4 2020, 3,775,894 were originated — representing a 13.5% year-over-year decline.    

The latest total was also 18.1% less than Q1 2021’s peak.

The overall drop-off resulted from across-the-board quarterly declines in all three categories of conventional loans — purchase, refinance and home-equity. 

On an annual basis, only purchases lending clocked in higher than the year prior.

Refinance mortgage originations decreased for the third straight quarter. The annual drop was the largest in three years. 

In Q4 2021, 1.81 million home loans were refinanced, that’s a drop of 10.8% from the third quarter and 22.7% from a year earlier. 

At $578 billion in Q4 2021, refi dollar volume was also down, falling 9% from the Q3 2021’s 635.4 billion and dropping 17.5% from Q4 2020’s $700.7 billion.

“The receding volume of business for the residential mortgage industry is now showing up across all major categories of loans and appears to be more than just a temporary slide,” said Todd Teta, chief product officer at ATTOM. “No doubt, total lending levels are still up over normal amounts over the past decade. And the drop-off in purchase loans seems to flow from a lack of housing supply rather than the housing market boom ending. But declining business for lenders remains a key point to watch in assessing the state of the market, especially with interest rates likely to climb this year.”

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