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The Texas Squeeze: A series examining the high cost of high growth in North Texas.
North Texans are taking out far fewer new home loans than they did a year ago, a signal that higher housing costs are cooling demand among borrowers.
The number of new Dallas-Fort Worth home loans fell about 20% last quarter, according to a new report from Attom Data Solutions. The company recorded 21,194 new local mortgages, down from 26,470 in the first quarter of 2021.
Nationally, new home loans fell 12% since last year and saw the third quarterly decline in a row. The dollar volume of purchase loans dropped 16% to $371.3 billion.
The report includes single-family homes, condos, townhomes and two- to four-unit apartment properties.
Refinancing was down even more significantly due to a spike in mortgage rates at the start of the year. Local refinancing activity dropped 45% from 56,110 to 31,507 loans since last year. The number of national refinance loans fell 46%.
Rick Sharga, Attom’s executive vice president of market intelligence, said that while the drop in refinancing activity was no surprise considering rising interest rates, many forecasts for the year expected purchase loans to increase in number and dollar volume. Instead, buyer activity appears to be cooling.
“The weakness in purchase loan activity shows just how much of an impact the combination of escalating home prices and rising interest rates have had on borrower activity this year,” Sharga said in the report.
All of Texas’ major metros saw declines in new mortgage loans, except for San Antonio, where they were up 2.4%. Houston saw the largest decrease of loans at 23%, with lending down 16% in Austin.
The drop in lending matches up with a 7% decline in single-family home sales for the year as of April, according to the Texas Real Estate Center at Texas A&M University. Also, many homebuyers and institutional investors have been beating out borrowers in bidding wars with all-cash offers.
The decline in national mortgage demand continued into June. Purchase and refinance application volume reached its lowest level in 22 years at the start of this month, according to the Mortgage Bankers Association.
“The purchase market has suffered from persistently low housing inventory and the jump in mortgage rates over the past two months,” said Joel Kan, an economist with the Mortgage Bankers Association, in a statement. “These worsening affordability challenges have been particularly hard on prospective first-time buyers.”
The 30-year fixed-rate mortgage averaged 5.23% on June 9 after a few weeks of little movement, according to Freddie Mac. Rates started the year at 3.45%.
This story has been updated with the correct percentage change in single-family home sales.
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June 10, 2022 at 01:45AM
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