On September 27, 2023, the CFPB released its annual report on residential mortgage lending activity and trends. The report provides an overview of residential mortgage lending in 2022 based on the data collected under the Home Mortgage Disclosure Act (HMDA).
According to the report, mortgage applications and originations declined, while rates, fees, discount points, and other costs increased in 2022. In addition, overall affordability declined significantly, with borrowers spending more of their income on mortgage payments and lenders more often denying applications for insufficient income. Most refinances during the reported period were cash-out refinances, and, in a reversal of recent trends, the median credit score of refinance borrowers declined below the median credit score of purchase borrowers.
Key findings from the 2022 data analysis include the following:
Borrowers paid much more in costs and fees. Costs and fees increased by 22% from 2021. A higher percentage of borrowers (50.2%) paid discount points in 2022 than in any other year since data collection in this area began.
Cash-out refinances comprised majority of refinance originations. Refinances dropped to 2.2 million in 2022, a 73.2% reduction from 2021. Most of the refinances were cash-out refinance loans originated by independent lenders.
Home-equity lines of credit rose. Home-equity lines of credit were the only form of refinancing that increased from 2021 to 1.27 million.
Average monthly mortgage payments increased more than 46%. Driven by the rise in mortgage interest rates, the average monthly payment for borrowers taking out a conventional conforming 30-year fixed-rate mortgage rose from $1,400 in December 2021 to $2,045 in December 2022.
Overall, Hispanic and Black borrowers experienced worse outcomes. Black and Hispanic borrowers were denied loans at higher rates, received smaller loans, were charged higher interest rates, and paid more in upfront fees than white and Asian borrowers.
Lenders increasingly denied applicants for insufficient income. Lenders denied loan applications due to insufficient income at higher rates than at any point since that data was first collected and reported in 2018.
Read the CFPB’s full press release here.
The full report can be found here.