Local mortgage loans at an all-time high; refi trend begins to ebb

Tri-Cities mortgage loans hit an all-time high during the second quarter of this year. At the same time, refinancing was showing the first signs of cooling.

There were 4,348 new loans in the seven-county Tri-Cities region, according to ATTOM Data Solutions Q2 Residential Mortgage Origination Report. The local market’s annual performance lines up with the national trend and outperformed the U.S. quarterly comparison. Tri-Cities new loans increased from the first quarter. Nationwide they were down. It was the first national Q2-to-Q1 decline since 2011.

The rare quarterly drop-off came with the refinance activity decline canceling out a rising number of home-purchase loans. Although new local refi loans declined for the quarter, they continued to outnumber purchase loans as owners continued scrambling to lock in better rates.

“The demand for home loans across the country shifted significantly in the second quarter as refinancing activity receded and home-purchase and equity loans increased. We haven’t seen that pattern for several years,” said Todd Teta, ATTOM’s chief product officer. “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. 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 point for the lending industry.”

As is often the case, the local real estate landscape doesn’t neatly fit into the national pattern.

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Refinancing has been on a tear since the last quarter of 2019 when mortgage rates began a race for the bottom. Since then, 12,253 local owners have refinanced their mortgages. During the same period, lenders made 10,949 purchase loans. Equity loans have been on a steep decline since the last quarter of 2020.

Total mortgage loans peaked in the Johnson City metro area during the second quarter of 2007 with 2,216 loans. The Kingsport-Bristol peak was during the third quarter of 2004 with 28,805 loans.

Federal Housing Administration (FHA) backed mortgages accounted for 9.6% of all residential property loans during the second quarter. That was up 8.8% from the first quarter and up 9.4% from last year.

Residential loans backed by the U.S. Department of Veterans Affairs (VA) accounted for 7% of the Q2 loans. That was down 8.4% from the previous quarter and down 8.8% from a year ago.

The analysis does not drill the FHA or VA loans down the metro area level.

The median down payment on residential properties bought with financing during the second quarter was $25,000, up 35.1 percent from $18,000 during the second quarter.

The report did not include the median down payment for local metro areas because they did not meet the 1,000 single-family and condo financed sales during the quarter benchmark.

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