CFPB Report Signals End of Home Refinancing Boom

The Consumer Financial Protection Bureau (CFPB) released its 2021 Mortgage Market Activity and Trends report on Monday, which covers residential mortgage lending activity and trends for the year. In particular, the report shows that an increase in activity was driven primarily by home purchase loans, signaling an end to the refinancing boom, and that the share of home purchase loans increased for minority borrowers compared to non-Hispanic white borrowers.

Key Takeaways

  • The CFPB has released its 2021 report detailing trends and activity for residential mortgage loans.
  • The report highlights increased shares in purchase loans 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).

The CFPB’s 2021 Mortgage Market Report’s Key Findings

Under the HMDA, many financial institutions are required to maintain, report and publicly disclose loan-level information about mortgage loans. The CFPB’s Mortgage Market Activity and Trends report is a product of this law and provides key information about whether home lenders are serving the housing needs of the communities they’re in.

In the 2021 report, the federal agency lists a few key findings:

  • Minority borrowers increased their share of home purchase loans: 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. In contrast, non-Hispanic white borrowers saw their share of purchase loans decrease from 59.1% to 55.6%.
  • Black and Hispanic white borrowers continue to see higher denial rates and lower loan amounts: Overall, Black and Hispanic white borrowers qualified for lower median loan amounts, had lower median credit scores, and had higher denial rates compared to non-Hispanic white and 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-end mortgage originations, excluding reverse mortgages, increased by 2.4% from 2020 to 2021. But unlike the prior year, where the increase in originations was driven by refinancing, most 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 lending institutions reported at least one closed-end mortgage origination in 2021, but the top 25 lenders by volume accounted for 43.9% of all closed-end loans. What’s more, they originated 53% of all refinance loans.

You can read the full report on the CFPB’s website.

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