CFPB report signals end of home refinance boom
The Consumer Financial Protection Bureau (CFPB) released its 2021 Mortgage Market Activity and Trends Report on Monday, which covers residential mortgage activity and trends for the year. In particular, the report shows that an increase in activity was mainly driven by housing loans, signaling the end of the refinancing boom, and that the share of housing loans increased for minority borrowers compared to borrowers non-Hispanic whites.
Key points to remember
- The CFPB has released its 2021 report detailing residential mortgage lending trends and activity.
- The report highlights an increase in purchase loan shares for minority borrowers and a shift from refinance loans to purchase loans.
- The report is based on data submitted by thousands of mortgage lenders under the Home Mortgage Disclosure Act (HDMA).
Key Findings from the CFPB Mortgage Market Report 2021
Under the HMDA, many financial institutions are required to maintain, report and publicly disclose loan-level mortgage information. The CFPB’s Mortgage Market Activity and Trends Report is a product of this Act and provides key information on whether mortgage lenders are meeting the housing needs of the communities in which they are located.
In the 2021 report, the federal agency lists some key findings:
- Minority borrowers increased their share of home loans: Black borrowers’ share of home purchase loans fell from 7.3% in 2020 to 7.9% in 2021, Hispanic white borrowers saw their share of home purchase loans housing increase from 9.1% to 9.2%, and the share of Asian borrowers increased from 5.5% in 2020 to 7.1% in 2021. In contrast, non-Hispanic white borrowers saw their share of loans to buy go from 59.1% to 55.6%.
- Hispanic black and white borrowers continue to see higher rejection rates and lower loan amounts: Overall, black and white Hispanic borrowers qualified for lower median loan amounts, had lower median credit scores, and had higher denial rates than white and non-Hispanic Asian borrowers. Black and Hispanic white borrowers also paid higher median interest rates and higher total loan costs overall compared to their non-Hispanic white and Asian counterparts.
- Mortgage originations were driven by home purchase loans: Closed mortgage originations, excluding reverse mortgages, grew 2.4% from 2020 to 2021. But unlike the year before, when the increase in originations was due to refinancing, the bulk of the increase in 2021 can be attributed to jumbo home purchase loans.
- The top 25 lenders by loan volume accounted for more than half of refinance loans: 4,332 credit institutions reported at least one closed-end mortgage issuance in 2021, but the top 25 lenders by volume accounted for 43.9% of all closed-end loans. In addition, they originate 53% of all refinance loans.
You can read the full report on the CFPB website.