Mortgage activity has the largest percentage decline since 2008, but down payments soar

Fast-rising interest rates have put a chill on the housing market, as home loans tumbled to the lowest level in 14 years – and sales moving forward will likely follow.

Nationwide, lenders approved 2.39 million mortgages – from purchases to refinancing to home equity lines of credit loans – during the second quarter, a 13% decline compared to the first quarter, and the fifth-consecutive quarterly drop. Mortgage activity plummeted 40% compared to second-quarter 2021, the biggest annual drop since 2008.

Dollar volume also dropped in the second quarter compared to a year ago, off about 35%, according to ATTOM.


California has been harder hit by the higher mortgage rates than the U.S. overall. All 10 metros – from the Bay Area and Sacramento to San Diego – had a more than 40% drop in mortgage activity during the second quarter compared to a year ago, according to ATTOM.

Lower-priced areas – such as Bakersfield, Fresno and the Inland Empire – had home loans fall 40% to 50%, while higher-priced markets struggled more. San Jose-area mortgage activity collapsed 64% from a year ago (see table).

The national and metro figures are from the second quarter and mortgage rates have inched higher in recent weeks. The average 30-year mortgage rate was 5.89% for the week ending Sept. 8, compared to 2.88% a year ago, according to Freddie Mac. It’s the highest rate since 2008, just before the housing market collapse and the Great Recession.

“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,” says Rick Sharga, executive vice president of market intelligence at ATTOM.

Indeed, only 16% of consumers could afford to buy a home in California during the second quarter, the lowest percentage in almost 15 years, according to the California Association of Realtors. 

Second quarter mortgage activity vs. a year ago
Metro% of loans vs. a year ago
Los Angeles-54.2%
Riverside-San Bernardino-47.3%
San Diego-58.0%
San Francisco-58.7%
San Jose-64.4%
Santa Barbara-50.6%
Ventura County-58.9%
Source: ATTOM

The average buyer needs to earn at least $199,000 to qualify for a 30-year mortgage with a 20% down payment. And the monthly mortgage payment, including property taxes, would still be about $4,980. A year ago, the mortgage would have been less than $3,000 per month.


Despite the many challenges of higher mortgage rates, the highest inflation rate since 1983 and a possible recession looming, home buyers in California are plunking down large down payments. Those big down payments are thanks to a huge increase in home equity – and home values – in recent years. 

The average home buyer in the 10 metros in California – again, from the Bay Area to San Diego – had a 17.5% down payment during the second quarter, almost double the national average of 9.1%. 

Only home buyers in Bakersfield had a smaller down payment (6.8%) than the national average. The average down payment in half of the 10 markets exceeded 20%, with San Jose the highest at 23% (see table below for the average down payment by region).

San Jose home buyers had the largest down payments during the second quarter in California. Shutterstock

The figure indicates the importance of higher incomes and the record-setting run-up in home values.

High home prices coupled with the higher mortgage rates have created an oddity in the Golden State – the Bay Area’s affordability index is better than the statewide average, thanks to higher incomes compared to the rest of the state.

“The combination of much higher mortgage rates and rising home prices have made the notion of home buying simply unaffordable for many prospective buyers, which threatens to drive loan volume down even further as we exit the spring and summer months,” Sharga says.

Average down payment in dollars and percentage for second-quarter 2022

MetroAverage down paymentDown payment percentage
San Jose$425,50023.6%
San Francisco$316,00022.6%
Ventura County$199,80022.2%
Los Angeles$215,00021.5%
San Diego$186,00020.0%
Santa Barbara$135,00019.6%
Riverside-San Bernardino$68,00012.1%
Source: ATTOM