Q1 2024 mortgage lending activity declines to near-record low

Mortgage lending in the U.S. dropped by 6.7% in the first quarter of 2024 to 1.28 million mortgages secured by residential property, the 11th drop recorded in the past 12 quarters and the lowest level since the year 2000, according to the newest U.S. Residential Property Mortgage Origination Report compiled by data provider Attom.

This decline contributed to a 4.8% reduction in residential lending activity compared to first-quarter 2023 and a 69.3% reduction since reaching a high point in 2021, according to the report. Cited culprits behind the decline include tight inventory levels, elevated mortgage interest rates and affordability challenges for a large number of U.S. households.

All major mortgage lending categories sustained losses, the report said.

“Purchase-loan activity went down another 9.9% quarterly, to about 565,000, while refinance deals dipped downward by 1.9%, to 491,000,” the report stated. “Home-equity credit lines slipped 9%, to 222,000. Measured monetarily, lenders issued $405.6 billion worth of residential mortgages in the first quarter of 2024. That was down 4.8% from the fourth quarter of 2023 and 4.5% from the first quarter of last year.”

Purchase loans were the most common type of mortgage in the early months of 2024, comprising “more than 40%,” but varying paces of change among all loan types helped drive an overall reduction in all residential purchase mortgages for the third consecutive quarter.

“There is reason to hope that we will see something of a turnaround when second-quarter data comes in, given the jump in lending activity that happened during the peak home-buying season of 2023,“ Rob Barber, CEO of Attom, said in a statement accompanying the report. “But with little sign that interest rates are coming down, which could fire up refinance and HELOC lending, or that supplies of homes for sale are going up, any increase is likely to be limited.“

Average interest rates for 30-year fixed loans remained right around 7% in the early months of the year, which limited mortgage lending by keeping homeownership costs elevated for consumers. Bank and nonbank lenders issued slightly less than 1.3 million residential mortgages in Q1 2024, down from nearly 1.4 million in Q4 2023.

On a dollar basis, $405.6 billion was lent to homeowners in Q1 2024, down from $426.1 billion in Q4 2023 and $424.6 billion in Q1 2023. Refinances were higher on a year-over-year basis, however, with lenders issuing 490,953 refis in Q1 2024, 11.3% higher than Q1 2023 due to a “short-lived jump” observed last year.

HELOC lending also slipped in Q1 2024, but government-backed lending from the Federal Housing Administration (FHA) and U.S. Department of Veterans Affairs (VA) rose as a percentage of all lending activity.

FHA-backed loans accounted for 210,246, or 16.5%, of all residential property loans originated in Q1 2024, up from a 15.7% share in Q4 2023 and a 12.9% share in Q1 2023. VA-backed loans totaled 68,430, or 5.4%, of all residential mortgages from January through March, a share that rose on a quarterly basis and decline slightly year over year.

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