CFPB Annual Report: End to Mortgage Refinancing Boom, Increase in Home Purchase Loans | Sheppard Mullin Richter & Hampton LLP

On September 29, the CFPB released its annual report on residential mortgage lending activity and trends for 2021. Notably, the report shows a shift from refinance loans in 2020 to home purchase loans in 2021—with 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. Additionally, the top 25 closed-end lenders by loan volume held nearly half of the market share of residential mortgage lending; continuing a trend that has risen each year since 2018. Key findings from this year’s report includes:

  • Home purchase loans drove the increase in mortgage originations while refinance loans fell: Excluding reverse mortgages, closed-end mortgage originations increased in 2021 by 2.4%, from 13.4 million in 2020 to 13.7 million. While between 2019 to 2020, the 66.8% increase in originations was largely driven by refinances, most of the increase from 2020 to 2021 was due to jumbo home purchase loans. Indeed, non-cash-out refinance loans began decreasing following a peak in March 2021 in connection with increase in market interest rates.
  • The total number of mortgage lending institutions reporting HDMA 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.
  • Minority shares of home purchase loans increased between 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.
    • Non-Hispanic white borrowers’ share of home purchase loans decreased from 59.1% to 55.6% during the same time period.

Putting It Into Practice: Data collected under HMDA provides regulators, such as the CFPB, insight as to whether financial institutions are serving the housing needs of local communities and can help identify possible discriminatory lending patterns. The CFPB has historically used such data and findings to inform its enforcement activities.

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