Home sales prices are not the only double-digit increases showing up. First-quarter loans took a big hit.

According to Attom Data Solutions, the number of Tri-Cities total loan originations, purchase loans, and refinances were down by double-digits from the previous quarter. They were also down from last year. The exception was the number HELOCs in the Kingsport-Bristol metro area. They were up 5%.

Nationwide, Attom’s first-quarter analysis shows the decline marked the fourth quarter quarterly decrease. The timeline is a little different for the local market.

Overall, lenders issued 3,553 mortgages in the Johnson City and Kingsport-Bristol metro markets, down 16.7% from the previous quarter.

Refinancing continued its domination of the local market and, unlike the national trend, didn’t account for the largest decrease in total loans. That distinction went to purchase loans. They were down 20%, while refi loans were down 16.4%.

Nationwide, the biggest contributor to the downturn was a decrease in refinance deals. “The drop-off in refinancing activity is no surprise with mortgage rates rising as rapidly as they have,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “But many forecasts expected purchase loans to remain strong in 2022, and even increase in both the number of loans originated and the dollar volume of those loans. The weakness in purchase loan activity shows just how much of an impact the combination of escalating home prices and rising interest rates have had on borrower activity this year.”

Local purchase loans have been declining since the third quarter of last year. So far, they declined 28.7% since the peak.

The Kingsport-Bristol metro area consistently accounts for more purchase loans than the Johnson City metro area. During the first quarter, there were 785 in Kingsport-Bristol and 626 in Johnson City.

The same pattern exists for refinancing, but Kingsport-Bristol’s decline rate is steeper than Johnson City.

The continued shrinkage in overall residential lending during the first quarter reinforced a stark reversal for the mortgage industry following a near-tripling of activity from early 2019 through early 2021. The first-quarter figures come amid multiple forces that threaten to continue the recent trends, including 30-year mortgage rates that have risen past 5 percent this year, an ongoing tight supply of homes for sale around the country that limits the number of home purchases, rising inflation and other uncertainties surrounding the U.S. economy, according to Attom.

They also add to a list of indicators showing that the nation’s decade-long housing market boom may be cooling off, including slower price growth, smaller home-seller profits, and declining home affordability.

Local HELOCs increased to 184 in Kingsport-Bristol from 175 during the last quarter of 2021. They declined to 102 in the Johnson City metro area from 113.

“With affordability apparently slowing down demand from move-up homebuyers, we’re likely to see a continuing increase in HELOCs and cash-out refinance loans, as those homeowners tap into the record $27 trillion of equity to make improvements in their current properties,” Sharga added.

Categories: REAL ESTATE