Mortgage volume fell in 2Q from 1Q for first time in a decade

For the first time since 2011, lending activity shrunk in the second quarter from the first, according to Attom Data Solutions.

This exception to the typical pattern followed originations increasing in the first quarter from the fourth for the first time since 2009. The Residential Property Mortgage Origination Report showed 3.78 million home loans produced in the second quarter of 2021, down 2.9% quarterly from a revised 3.89 million while jumping 29.3% annually from 2.92 million.

Loan volume totaled $1.18 trillion, down 0.6% from $1.19 trillion in the first quarter and spiking 38.9% from $853.3 billion the year before. The steady climb of home prices in the past year likely accounts for why dollar volume rose even though the number of loans fell.

Refinancing activity accounted for 2.23 million loans, a quarterly drop of 14.8% from 2.62 million and an annual increase of 25.5% from 1.78 million. Similarly, the $674.7 billion in refi dollar volume fell 15.4% from the first quarter and rose 25.7% from a year ago, but was stronger than some forecasts anticipated.

Purchase growth partially offset the refinancing dip with 1.32 million originations, surging 22.4% from the first quarter’s 1.08 million and 52.4% from 866,782 in the second quarter of 2020. Those combined for $465.5 billion, representing jumps of 30.9% quarter-over-quarter and 77% year-over-year. While the total number of loans produced weren’t enough to generate an overall consecutive quarter gain, the relative strength in purchases was still notable.

“We haven't seen that pattern for several years," Todd Teta, chief product officer at Attom Data Solutions, said in the report. "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 period for the lending industry."

Meanwhile, home equity lines of credit grew quarterly for the first time since 2019. HELOC originations totaled 225,240, up 17.6% from 191,464 in the first quarter but down 18.4% from 275,892 the year prior. That volume stacked up to $44.7 billion, rising 15.7% quarterly and falling 16.8% annually.