Where have all the mortgages gone?

The total number of documents we recorded in 2013 (67,001) was down 6% from the number recorded in 2012 (71,596).  A major factor in that change was a steep decline in the number of mortgages recorded.  For the entire year, mortgages were down 16% compared to 2012 but for the final quarter of 2013, the decline was much more dramatic.

In October 2013, mortgages were down 47% from October 2012; in November, the decline was 52%; and in December the decline was 49%.  The first two weeks of January suggests things could be getting even worse.  In the first two weeks of January 2013 we recorded 638 mortgages.  For the same period this January, we recorded only 251.  I won't calculate the percentage decrease but it would be a big one. 

Why the big drop?  There seem to be multiple factors.  The most important one is that interest rates went up by an amount that is relatively slight, but still might be enough to have a substantial impact.  Another factor is the new regulations on home lending imposed by the Consumer Financial Protection Bureau.  Even though they are designed to protect consumers, when regulations are first implemented, it's almost inevitable that things will move slowly and that seems to be the case now.  The pending increase in flood insurance premiums is also a factor.  One banker cited all these items but added another event: last fall's shutdown of the Federal government.  This banker identified the shutdown as the start of the recent decline in mortgage activity.

Even in the best of times, the winter months are slow for real estate.  Hopefully this is just a seasonal lull and not the early stages of an extended period of stagnation in the home sales and refinancing markets.