Key findings from CFPB annual report on residential mortgage lending activity and trends.

The CFPB released its annual report on residential mortgage lending activity and trends in 2022. The report finds jumps in closing costs and denials for insufficient income, as well as a growing proportion of cash-out refinances. Key findings from the year’s analysis include:

• Borrowers paid much more in costs and fees: When taking out a mortgage, borrowers often pay certain costs and fees. These costs rose 22% from 2021 to $5,954. 
• Cash-out refinances comprised the majority of refinance originations: In 2021, the number of refinances was 8.3 million. Today’s report shows that the number dropped to 2.2 million in 2022, a 73.2% reduction.
• Home-equity lines of credit rose: Though they did not comprise the majority of refinances, home-equity lines of credit were the only form of refinancing to see a rise from 2021. 
• Average monthly mortgage payments increased more than 46%: 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 – a 46.1% increase. 
• Overall, Hispanic and Black borrowers experienced worse outcomes: Black and Hispanic borrowers were denied loans at higher rates, received smaller loans, were charged higher interest rates, and paid more in upfront fees than white and Asian borrowers. 
• 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.

Source: CFPB