Mortgage lending activity in first quarter of 2024 falls to near-record low

U.S. mortgages fell 6.7% in the first quarter of 2024 to 1.28 million mortgages secured by residential property, the 11th decline in the last 12 quarters and the lowest level since the year 2000, according to the latest report on residential mortgages in the United States. Original report compiled by data provider Atom.

This decline contributed to a 4.8% reduction in residential loan activity compared to the first quarter of 2023 and a 69.3% reduction since peaking in 2021, according to the report. Cited culprits behind this decline include tight inventory levels, high mortgage interest rates, and affordability issues for many U.S. households.

All major mortgage categories suffered losses, the report said.

“Purchase loan activity fell a further 9.9% quarterly, to around 565,000, while refinancing transactions fell 1.9%, to 491,000,” the report said. “Home equity lines of credit fell 9%, to 222,000. In monetary terms, lenders issued $405.6 billion in residential mortgages in the first quarter of 2024. This represents a drop of 4.8 % compared to the fourth quarter of 2023 and 4.5% compared to the first quarter of last year.

Purchase loans were the most common mortgage type in the first months of 2024, accounting for “more than 40%”, but varying rates of change among all loan types contributed to an overall reduction in all residential purchase mortgage loans for the third consecutive quarter.

“There is reason to hope that we will see a turnaround when second quarter data becomes available, given the increase in lending activity that occurred during the peak purchasing season of housing of 2023,” said Rob Barber, CEO of Attom. a statement accompanying the report. “But with little sign of falling interest rates, which could trigger refinancing and HELOC loans, or an increase in the supply of homes for sale, any increase will likely be limited.”

Average interest rates for 30-year fixed-rate loans remained around 7% through the first months of the year, limiting mortgage lending by keeping the costs of homeownership high for consumers. Bank and non-bank lenders issued just under 1.3 million residential mortgage loans in the first quarter of 2024, compared to almost 1.4 million in the fourth quarter of 2023.

In dollar terms, $405.6 billion was loaned to homeowners in the first quarter of 2024, compared to $426.1 billion in the fourth quarter of 2023 and $424.6 billion in the first quarter of 2023. Refinancings, however, were higher 'year-over-year, with lenders issuing 490,953 refis in the first quarter. 2024, 11.3% more than in the first quarter of 2023 due to a “short-term jump” observed last year.

HELOC loans also declined in the first quarter of 2024, but government-backed loans from Federal Housing Administration (FHA) and U.S. Department of Veterans Affairs (VA) increased as a percentage of overall lending activity.

FHA-backed loans accounted for 210,246, or 16.5%, of all residential real estate loans originated in the first quarter of 2024, compared to a 15.7% share in the fourth quarter of 2023 and a 12.9% share in the first quarter 2023. VA-guaranteed loans totaled 68,430, or 5.4%. , of all residential mortgages from January to March, a share that increased on a quarterly basis and decreased slightly year over year.

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