RSSMortgage applications and originations fell significantly last year, according to the Consumer Financial Protection Bureau’s annual report on residential mortgage lending activity and trends.
Driven by an increase in mortgage interest rates, the average monthly mortgage payment increased more than 46 percent to $2,045 in December 2022 from $1,400 the previous year. The median interest rate for a 30-year, fixed-rate mortgage was 6.5 percent at the end of last year.
“The higher interest rate environment had profound effects on the mortgage market in 2022, with borrowers paying much more in monthly payments,” said CFPB Director Rohit Chopra. “These trends are likely to continue given further increases in interest rates in 2023.”
Mortgage costs increased 22 percent last year to $5,954 as a record percentage of borrowers agreed to pay an upfront fee to lower their interest rate. Overall affordability fell significantly, according to the CFPB, as borrowers spent more income on mortgage payments and lenders more often denied applications for insufficient income.
Independent lenders continued to dominate the home mortgage lending market, except for home equity lines of credit, which was the only type of refinancing that saw an increase in 2022. “Depository institutions offered the majority of the 1.27 million HELOCs in 2022,” the CFPB stated. “HELOCs tend to have lower interest rates, monthly payments and foreclosure risks than cash-out refinances.”
According to the CFPB, Hispanic and Black borrowers were denied loans at greater frequency, received smaller loans, were charged higher interest rates and paid more in upfront expenses than white and Asian borrowers. More than half of mortgage denials for Asian applicants were for insufficient income, compared to 45 percent for Black and Hispanic applicants and approximately 40 percent for white applicants.
