The signs were all there. It was clear that mortgage originations were trending down as interest rates rose, but it’s still striking to see the results in black and white.
According to newly released data from ATTOM Data Solutions, mortgage originations plummeted to a four-year low during the second quarter, driven by a sharp decline in refinances due to increasing interest rates.
ATTOM’s Q2 2018 U.S. Residential Property Loan Origination Report, released Thursday morning, shows that there were 1,527,433 residential mortgages originated in Q2 2018, which is down 16% from the first quarter and down 27% from the same time period last year.
The 1.5 million mortgages originated in the second quarter were the fewest in any quarter since the first quarter of 2014.
The bulk of the decline came from refis, providing confirmation of other recent indicators that the industry is in the middle of a significant drop in refi demand.
According to ATTOM’s report, just over 590,000 of the 1.5 million mortgages originated in the second quarter were refis, a drop of 26% from the first quarter of this year and a drop of 27% from the second quarter of 2017.
The cause of the drop? Rising interest rates, as shown in recent reports from Ellie Mae and Impac Mortgage’s most recent earnings information, both of which indicated that a drop in refis was likely industry-wide.
“Rising mortgage rates are cooling mortgage demand across the board, with overall originations down to their lowest level since 2014 — the last time we saw more than six consecutive months with average 30-year fixed mortgage rates above 4%,” Daren Blomquist, senior vice president at ATTOM Data Solutions, noted.