A sign announces a home for sale on Munjoy Hill, Wednesday, Jan. 25, 2023, in Portland, Maine. Over the past year, the Fed has raised its key short-term rate 10 times, causing many kinds of consumer and business loans, including mortgages, to become more expensive. Credit: Robert F. Bukaty / AP

Portland-area homeowners took out far fewer mortgages in the first three months of this year as inventory shortages and high interest rates persisted, a study released Thursday found.

The total number of residential home loans in the first quarter in Greater Portland was down 56 percent from the same three months last year and off almost 32 percent from the previous quarter, according to the study by ATTOM, a real estate data firm based in California.

The trends in Greater Portland followed the nationwide drop in loans to their lowest rate in 20 years. Loan applications have been decreasing for eight straight quarters as homeowners face higher interest rates.

Uncertain economic conditions also are playing a role, Rob Barber, ATTOM’s CEO, said.

“Things remain uncertain in the near future, with the potential for interest rates and inflation to go either way,” he said. “The spring buying season will be a key indicator of whether things may turn around.”

The number of Maine homes available for sale in April increased nearly 10 percent from March, but it still is significantly lower than pre-pandemic levels, Carmen McPhail, president of the Maine Association of Realtors, said when releasing April single-family home sales. Sales were down 31 percent in April compared with the previous year, but prices were 6 percent higher.

McPhail said there were just under 2,300 homes on the market statewide in April compared with 7,100 in April 2019.

“Buyers are actively searching, and many are not finding homes that are suitable for their needs and within their budgets due to increased mortgage rates and higher pricing,” she said.

In the Greater Portland market, which includes South Portland, home purchase loans were down more than 46 percent in the first three months of this year compared with the same time last year, according to ATTOM. Refinancings also were down 70 percent comparing the two years, and home equity lines of credit were down 15 percent.

The Portland area saw its peak loans during the fourth quarter of 2005, when a total of 12,111 loans of all types were taken out. The lowest loan amount was in the first three months of this year, when homeowners took out a total of 2,666 loans.

Across the U.S., mortgages for home purchases were down 44 percent in the first three months of this year compared with last year, while refinancings were down 73 percent and home equity lines of credit were down 5 percent, ATTOM found. Home purchase loans made up almost half of all new loans in the first quarter.

Lenders across the U.S. issued $388 billion worth of residential mortgages in the first quarter, which is down 58 percent since last year.

The home equity lines of credit had been a bright spot in the past year compared with other loans, Barber said. Homeowners took advantage of the rising equity in their homes, backed by ongoing high home prices, and took out cash on their properties for home improvements or investments. But even those loans took a hit in the first three months of this year.

ATTOM analyzed recorded mortgage and deed of trust data for single-family homes, condos, town homes and multi-family properties of two to four units for the report. Each was counted as a separate loan origination.

Lori Valigra, investigative reporter for the environment, holds an M.S. in journalism from Boston University. She was a Knight journalism fellow at M.I.T. and has extensive international reporting experience...