Mortgage lending trends: Refinancing boom over, shift to home purchase loans

A new CFPB report on residential mortgage lending activity and trends for 2021 indicates a shift from refinance loans in 2020 to home purchase loans in 2021. The report also found a greater share of home purchase loans going to Asian, Black, and Hispanic white borrowers relative to the share of home purchase loans for non-Hispanic white borrowers.

The top 25 closed-end lenders by loan volume held nearly half of the market share of residential mortgage lending — a trend that has risen each year since 2018, according to the report, “Data Point: 2021 Mortgage Market Activity and Trends.”

Key findings from the report include:

  • an increase in mortgage originations was driven by home purchase loans as refinance loans fell;
  • the number of mortgage lending institutions reporting HMDA data dropped in 2021; and
  • Asian, Black, and Hispanic white borrowers’ home purchase loan shares increased from 2020 to 2021.

The Home Mortgage Disclosure Act requires financial institutions to collect and report mortgage loan-level information on applications and originations, and the data inform determinations as to whether financial institutions are serving the housing needs of their local communities, according to the CFPB. Additionally, the data facilitate the distribution of funds to local communities to help attract private investment, as well as to help identify possible discriminatory lending patterns and to enforce antidiscrimination statutes.

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