Mortgage Lending Trends in Tennessee
The following reports provide an overview of residential mortgage lending patterns in Tennessee using the Home Mortgage Disclosure Act (HMDA) data, which is a very comprehensive data source on mortgage applications during the calendar year. They will be updated annually as the data become available.
In 2021, mortgage activity for all applications, including home purchase, refinancing and home improvement in Tennessee increased, regardless of outcome. Both home purchase and refinance loan originations were 4% higher than the previous year. In 2020 and 2021, homeowners refinanced their previous mortgages to take advantage of low interest rates. Refinance loan originations in 2021 increased by 4% compared to 2020 despite the fact that non-cash-out refinancing declined by 12%. The primary reason for increased refinance loan volume was a nearly 50% increase in cash-out refinances in 2021, which was stimulated by low interest rates and increased equity caused by home price appreciation in recent years.
Before Covid-19, mortgage lending data showed that loan originations of all types were on the rise in Tennessee. Home purchase loans, refinances, and home improvement loans all increased from 2018 to 2019. In particular, traditional home refinance loans were tremendously responsive to lower interest rates, preceding the pandemic environment. For a comprehensive view of how this varied across geography, demographic group, and income ranges, view the full report.
In 2018, mortgage activity (all applications; regardless of outcome; including home purchase, refinancing and home improvement) in Tennessee declined from the prior year, similar to national trends. The source of this decline in overall activity was a decrease in overall refinance activity. The 2018 HMDA data have improved detail from prior years; for the first time, this report summarizes information on the prevalence of cash-out refinancing (as opposed to traditional refinances) and borrower DTI ratios.