Mortgage Lending Trends: Consumer Financial Protection Bureau Shows a Shift in Refinance Loans to Home Purchase Loans

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The Consumer Financial Protection Bureau (CFPB) has released its annual report on residential mortgage lending activity and trends for 2021. The report, which is based on data submitted by thousands of lenders nationwide, shows that there was a shift from refinancing loans in 2020 to home purchase loans in 2021. In addition, the report found that the top 25 closed-end lenders by loan volume held nearly half of the market share of residential mortgage lending.

The Home Mortgage Disclosure Act (HMDA) was enacted by Congress in 1975 and is implemented by Regulation C. HMDA requires most financial institutions to maintain records of home mortgage applications, approvals, and denials. These data help determine whether financial institutions are meeting the credit needs of their local communities and serve as the basis for the distribution of government funds to attract private investment in areas where credit is unavailable. The data also help to identify possible discriminatory lending patterns and to enforce antidiscrimination statutes. In order to facilitate public understanding and use of HMDA data, the Bureau makes available certain information about covered institutions’ loan activity, including loans that were not approved or originated. The Bureau also periodically conducts studies using HMDA data. Findings from these studies are available on this website.

Key findings from this year’s analysis include:

  • Increase in mortgage originations was driven by home purchase loans as refinance loans fell: Closed-end mortgage originations, excluding reverse mortgages, increased in 2021 by 2.4%, from 13.4 million in 2020 to 13.7 million. While the 66.8% increase in originations from 2019 to 2020 was largely driven by refinances, most of the increase from 2020 to 2021 was due to jumbo home purchase loans. In fact, non-cash-out refinance loans began decreasing following a peak in March 2021.
  • The number of mortgage lending institutions reporting HMDA data dropped in 2021: At least one closed-end mortgage loan had been reported by 4,332 financial institutions, down by 3.1% from 4,472 financial institutions in 2020. The top 25 closed-end lenders by loan volume held a combined market share of 43.9%, which has risen yearly since 2018. The top 25 mortgage lenders by loan volume were particularly prominent in the refinance market, accounting for 53% of all refinance loans.
  • Asian, Black, and Hispanic white borrowers’ home purchase loan shares increased from 2020 to 2021: Black borrowers’ share of home purchase loans increased from 7.3% in 2020 to 7.9% in 2021. Hispanic white borrowers saw their share of home purchase loans increase from 9.1% to 9.2%, and Asian borrowers’ share increased from 5.5% in 2020 to 7.1% in 2021. The share of non-Hispanic white borrowers’ home purchase loans decreased from 59.1% to 55.6% during the same time period. Black and Hispanic white borrowers, overall, continued to qualify for lower median loan amounts, had lower median credit scores, and had higher denial rates compared to non-Hispanic white and Asian borrowers. Additionally, Black and Hispanic white borrowers paid higher median interest rates and higher total loan costs overall.
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This is the fourth year that HMDA data reflects changes implemented by the 2015 HMDA rule. The 2015 HMDA rule updated institution and transaction report criteria, and revised the data points that covered institutions must report.

Read the report, Data Point: 2021 Mortgage Market Activity and Trends.

Consumers can submit complaints about mortgage or refinance issues, or about other financial products or services, by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

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