He said: “Mortgage rates that have virtually doubled over the past year have decimated the refinance market and are starting to take a toll on purchase lending as well.
“The combination of much higher mortgage rates and rising home prices has made the notion of homebuying simply unaffordable for many prospective buyers, which threatens to drive loan volume down even further as we exit the spring and summer months.”
The downturn in total activity resulted from just 941,000 residential loans getting rolled over into new mortgages during Q2 – a figure that was down 36% from Q1 and 60% compared with the same period last year.
In total, lenders issued just under $808 billion worth of mortgages in Q2. That was down quarterly by 11% and annually by 35%. As with the number of loans, it was the biggest annual decrease in the dollar volume of loans in eight years.
Meanwhile, purchase loan activity increased slightly by 8% to 1.1 billion, representing 46% of all borrowing and reflecting the seasonal upswing of the Spring home-buying season, the report noted.