There were no surprises when real estate data agency ATTOM released its Q3 Residential Property Mortgage Origination Report last month.

Mortgage originations were down 47% from Q3 of last year—the sixth quarterly decrease in a row and the steepest annual drop since 2001.

Mortgage rates that are more than double the 3.10% average of a year ago, combined with high home prices, have locked many would-be homeowners out of the market.

The $636.5 billion volume in Q3 loans is a 22% decrease from $819.9 billion in Q2. More than $1.19 trillion was lent in the third quarter of last year.

But it’s not all doom and gloom.

There was a 2.7% uptick in mortgage applications in mid-November as rates dropped from 7.14% to 6.90% among signs of easing inflation.

There’s no such good news for refinance activity.

“Refinance activity remained depressed, down 88% over the year,” said Mortgage Bankers Association’s Chief Economist Joel Kan. “There is very little refinance incentive with rates so much higher than last year.”

No kidding. Why would anyone refinance a sub-4% loan now?

Lenders originated just 660,767 refinance loans in Q3. That’s down 31% from Q2 and almost 68% from the same time last year. This was the sixth consecutive quarterly drop in refinance activity.

But with the spike in home prices since the start of the pandemic, homeowners have built up a lot of equity. Instead of refinancing, they’re tapping into it with HELOCs.

HELOC (home equity line of credit) originations have increased during five of the last six quarters. In Q3, lenders originated 364,921 HELOCs—a 5% increase from Q2 and a nearly 48% increase from the third quarter of last year.

Will mortgage rates finally go down in 2023? Experts polled by The Mortgage Reports expect 30-year mortgage rates to land anywhere between 5% and 9.31% next year.

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