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 lending activity and trends for the year. In particular, the report shows that the increase in activity was primarily driven by home purchase loans, signaling the end of the refinancing boom, and that the share of home purchase loans increased for minority borrowers compared to non-Hispanic white borrowers.
- The CFPB released its 2021 report detailing residential mortgage loan trends and activity.
- The report highlights the increase in the shares of purchase loans to minority borrowers and the shift from refinancing loans to purchase loans.
- The report is based on data submitted by thousands of mortgage lenders under the Mortgage Disclosure Act (HDMA).
Key findings of the CFPB Mortgage Market Report 2021
Under HMDA, many financial institutions are required to maintain, report, and publicly disclose information regarding the level of loans about mortgage loans. The CFPB’s Mortgage Market Activity and Trends Report is a product of this act and provides key information on whether home lenders are serving the housing needs of the communities in which they are located.
In its 2021 report, the federal agency listed some key findings:
- Minority borrowers increased their share of home purchase loans: The share of black borrowers of home purchase loans increased from 7.3% in 2020 to 7.9% in 2021, white Hispanic borrowers saw their share of home purchase loans 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 purchase loans fall from 59.1% to 55.6%.
- Black and white Hispanic borrowers continue to see higher denial rates and lower loan amounts: In general, black and white Hispanic borrowers were eligible for lower median loan amounts, had lower average credit scores, and had higher denial rates compared to non-Hispanic white and Asian borrowers. Black and white Hispanic borrowers also paid higher average interest rates and generally higher total costs of loans than their non-white and Asian counterparts.
- Mortgage facilities were driven by home purchase loans: Closed mortgage facilities, excluding reverse mortgages, increased 2.4% from 2020 to 2021. But unlike the previous year, where the increase in assets was driven by refinancing, most of the increase in 2021 can be attributed to massive home purchase loans.
- The 25 largest lenders by loan volume account for more than half of refinancing loans: 4,332 lending institutions reported at least one closed mortgage origination in 2021, but the top 25 lenders by volume accounted for 43.9% of all closed loans. Furthermore, 53% of all refinancing loans originated.
You can read the full report on the CFPB website.