RALEIGH – Nationally, mortgage lending declined at a faster than normal pace during what is traditionally the busiest time of year for home buying, according to a new report from ATTOM Data Solutions.

The decline in lending activity in the third quarter followed a decline in lending in the second quarter, which had not previously occurred in the 21st century, according to ATTOM.

Nationally, 3.59 million mortgages secured by residential property, which is defined as residential housing of one to four units, were originated in the third quarter of 2021.

That’s a decrease of 8% compared to the prior quarter, though an increase of 3% year-over-year, according to the data.  That 8% dip is the largest quarterly dip in mortgage lending in more than a year, according to the data.

In Wake County, there’s a growing gap in the real estate market

“More notably, it was the first time in any year since at least 2000 that lending activity declined in both the second and third quarters, which usually are peak buying seasons,” a statement from ATTOM reads.

The trend exists in refinance activity, as well, the data set shows, with a decrease of 13% quarterly and a decrease of 3% from the third quarter of 2020, and the quarterly decrease was the largest in three years.

“The overflow stack of work that was hitting lenders for several years shrank again in the third quarter across the U.S. amid a few emerging trends,” said Todd Teta, chief product officer at ATTOM. “It looks more and more like homeowner’s voracious appetites for refinance deals has eased notably, while purchase lending also dipped. It’s still too early to say if the trends point to major shifts in lending patterns or the broader housing market boom. But the drop-off is significant, especially for home buying, which could suggest an impending housing market slowdown. We will be watching the lending trends extra closely in the coming months.”

Durham, Cary join Raleigh on hottest US real estate market list, study finds

How does the Triangle compare?

The Triangle’s housing market isn’t suffering from a demand-side issue, Jim Allen, real estate broker and broker-in-charge of the Jim Allen Group, told WRAL TechWire this week.  The decline in mortgage originations is more about the availability and total number of properties listed on the open market, Allen noted.

“There are not enough inventory of homes,” Allen stated.  “The shortage of housing is responsible.”

In the Durham-Chapel Hill metropolitan statistical area, 6,758 residential mortgage loans were originated in the third quarter, according to ATTOM, a decline of 6.7% from the prior quarter, when 7,245 loans were originated.  But that is up from the third quarter of 2020, when 6,148 loans were originated, the data set showed, and well higher than the 4,221 loans originated in the third quarter of 2019.

According to ATTOM, 2,290 of these loans were purchase loans.  ATTOM also tracks mortgage data on down payments and loan amounts, but on a fewer number of properties, as this data set includes single-family homes and condos, not all residential units.  In this data set, ATTOM data showed that the median loan amount was $315,000, a median down payment was $55,000, and the median sales price was $385,000 in the Durham-Chapel Hill MSA during the third quarter of 2021.

“Some people from out of state are offering cash or large down payments to sweeten expectations in tight markets,” said Courtney Brown, a real estate agent with Hunter Rowe.  “Some plan to refinance while others feel a house is a safe place to keep equity as the stock market feels volatile.”

During the third quarter of 2021, the share of all-cash purchases, meaning that there would be no mortgage loan required to transfer property ownership, was 32% in the Durham-Chapel Hill MSA, an increase of 28% from the prior year when cash sales were 25.1% of transactions, according to another data set from ATTOM.

And, the inventory of homes fell dramatically year-over-year in Durham County, dropping by 31.2% in September 2021 compared to September 2020, according to a Triangle MLS report.  In Orange County, inventory dropped by nearly 38% according to Triangle MLS data.

Home prices in Durham, Wake Counties soar to new highs – no slowdown in sight

In the Raleigh metropolitan statistical area, 20,988 mortgage loans originated for residential property located in the region in the third quarter of 2021, a decrease of 7.6% compared to the prior quarter, when 22,721 loans were originated.  That’s also a year-over-year decline of 7.9% as the region saw the origination of 22,790 loans originated in the third quarter of 2020.  There were 13,842 mortgage loans originated in the third quarter of 2019, according to the data set.

According to ATTOM, 6,841 of these loans were purchase loans.  In the data set tracking median price, median down payment, and median loan among, which tracked 3,854 single family or condo residences, ATTOM data showed a median loan amount of $334,545, a median down payment of $57,000, and a median sales price of $400,000 in the Raleigh MSA during the third quarter of 2021.

And, during the third quarter of 2021, the share of all-cash purchases in the Raleigh MSA was 28.7%, an increase of 68% from the prior year when cash sales were 17% of transactions in the MSA, ATTOM data showed.

In Wake County, the available inventory dropped by 50.1% year-over-year, with 2,575 homes available in September 2020 compared to 1,285 in September 2021, according to Triangle MLS data.

“Given our lack of inventory, the number of people and companies moving here, and the fact that while rates will rise they will likely still be low compared to other loans, it is unlikely that prices will drastically fall even if they plateau,” said Brown.

Investors are scooping up houses in Triangle, battling consumers in a tight market

Nationally, median down payment and median loan amounts increased in the third quarter, as well.

According to the ATTOM data, the median down payment nationally was $27,500, and the median loan amount was $295,954 for homes purchased in the third quarter of 2021 with financing.

A Redfin report released this week found that home inventory, nationally, hit an all-time low during the week ending on November 28, while also noting that inventory tends to see a seasonal drop of 15% in December compared to November.

“Meanwhile, headlines and new restrictions related to the omicron variant of the coronavirus might fuel some uncertainty and volatility in the economy,” said Redfin Chief Economist Daryl Fairweather.  “In the short term, global interest rates, including mortgage rates, could fall.  In this extremely tight housing market, we would quickly see a proportional increase in competition and home prices.”