Home loans post double-digit declines


TRI-CITIES, Tenn. – Double-digit downturns in refinance and purchase loans drove a decline in residential leading that far outweighed an increase in home-equity lines of credit.

Overall, lenders issued $636.5 billion worth of mortgages in the third quarter of 2022. That was down quarterly by 22% and 46% annually, according to ATTOM Data Solutions.  The Tri-Cities area decline was slightly less. Quarterly loans were down 16% and 42% annually.

Nationwide HELOCs were up 48% from last year. Locally they totaled 452, up 48% from last year.

“There are no surprises in this quarter’s loan origination numbers, as the unprecedented jump in mortgage rates has battered both the purchase and refinance markets,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “Prospective homebuyers have been priced out of the market by the combination of 7% mortgage rates and higher home prices. And refinance activity will probably continue to decline since the majority of homeowners have loans with sub-4% interest rates.”

There were 1,314 Tri-Cities refi loans during the third quarter. It was the lowest level since the first quarter of 2020.  Purchase loans have outnumbered refis for the last two quarters. They retreated after a quarterly mid-year spike.

Steve Reed, Benchmark Home Loans in Johnson City, said refinance loans at his firm are down 88%. “They are basically non-existent.”

Purchase loans are down 55%. That’s about where we were in 2019 so we’re getting back in line with more of a normal market, he added.

Reed thinks we’ll see mortgage rates improve if inflation rates continue improving.  Rates averaged 6.9% for the second week of November.

National Association of Realtors Chief (NAR)  Economist Lawrence Yun recently told Realtors he expects to see home sales decline by 7% in 2023. He also expects to see a strong rebound in sales during 2024. If mortgage rates stay at or near 7% “we may see a further uptick in home prices in 2023.”

“While HELOC activity has dramatically increased over the past few quarters, its growth rate slowed down significantly on a quarter-to-quarter basis, which raises the question of whether we might be at or near a cyclical peak in HELOC activity,” Sharga added. “Even with the recent increases, HELOC volume is still nowhere near the record level of activity we saw in the mid-2000s during the run-up to the financial crisis.”

Locally the quarterly HELOC growth rate in the Johnson City metro area slowed to 18% from 54% and to 0.4% from 54% in the Kingsport-Bristol. markets, yet.

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Categories: REAL ESTATE

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