CFPB Releases 2022 Data Collected Under HMDA
Written By: Joel Palmer, Op-Ed Writer
The year 2022 for the mortgage industry was one of declining applications and originations and increased fees charged to borrowers.
This is according to last week’s release of the 2022 Mortgage Market Activity and Trends report by the Consumer Financial Protection Bureau (CFPB). The report is based on data collected under the 1975 Home Mortgage Disclosure Act (HMDA).
"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.”
CFPB reported the following key findings in the 2022 report:
Applications and originations dropped significantly in 2022. Applications decreased by about 9 million, or 38.6 percent, and originations decreased by 6.6 million, or 44.1 percent. Lenders reported approximately 6.7 million closed-end site-built single-family originations in 2022, a 50.9 percent decrease from 13.7 million originations in 2021. The significant decline occurred in both home purchase and refinance activities but was more prominent in refinance.
Borrowers paid 22 percent more in costs and fees than in 2021. Costs and fees associated with taking out a mortgage rose to an average of $5,954. A higher percentage of borrowers (50.2 percent) paid discount points in 2022 than in any other year since data collection in this area began. In 2021, 32.1 percent paid discount points. The median borrower paid $2,370 for discount points in 2022.
Refinances fell by 73 percent and most were cash-out refinances. In 2021, the number of refinances was 8.3 million. In 2022, that number dropped to 2.2 million, a 73.2 percent reduction. Most of the refinances were cash-out refinance loans originated by independent lenders. According to CFPB, cash-out refinances can increase the risk of foreclosure as they typically have higher interest rates, higher monthly payments, and higher balances than other refinances, and can result in unsecured debt, such as credit card debt, becoming secured by the home.
Home-equity lines of credit rose. This was the only form of refinancing to rise from 2021. While independent lenders dominate the cash-out refinancing market, depository institutions offered the majority of the 1.27 million home-equity lines of credit in 2022. Home-equity lines of credit tend to have lower interest rates, monthly payments, and foreclosure risks than cash-out refinances.
The average monthly mortgage payment increased more than 46 percent. Driven by the rise in mortgage interest rates, the average monthly payment for borrowers taking out a conventional conforming 30-year fixed-rate mortgage (excluding taxes and insurance) rose from $1,400 in December 2021 to $2,045 in December 2022. The median interest rate for a 30-year fixed-rate mortgage at the end of 2022 was 6.5 percent.
Lenders increasingly denied applicants for insufficient income: Lenders denied loan applications due to insufficient income at higher rates than at any point since that data was first collected and reported in 2018.
Since 1975, the Home Mortgage Disclosure Act has required financial institutions to collect and make public certain loan-level information on mortgage applications and originations. In 2011, Congress transferred responsibilities for implementing the Act from the Federal Reserve Board of Governors to the CFPB.
This is the fifth year that the data reflect changes implemented by the 2015 HMDA rule, which implemented statutory changes in the Consumer Financial Protection Act and provided greater information to the public about home mortgage lending.
About the Author
As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
