Homeowners swap higher-rate loans for lower-cost options
Mortgage lending in the United States rose modestly in the third quarter of 2024, driven primarily by homeowners refinancing higher-rate loans from 2021 and 2022 as mortgage rates declined.
ATTOM’s latest Mortgage Origination Report showed a 1.9% quarterly increase in lending, marking the second consecutive quarterly gain – a pattern not seen since early 2021.
"Mortgage lending rose again in the third quarter, but at a far slower pace than during the Spring of this year when activity spiked nearly 25%," said Rob Barber, CEO at ATTOM. "The latest increase, small as it was, likely came mainly from homeowners trading higher-rate loans they got in 2021 and 2022 for cheaper mortgages resulting from declining mortgage rates.
During Q3 2024, 1.67 million residential mortgages were issued, up slightly from the previous quarter. Refinance activity increased by 6.9% to approximately 588,000 loans, while home-equity loans also saw a 2.3% rise to about 297,000 packages. These gains offset a 1.7% decline in purchase loans, which fell to 782,000 as the peak home-buying season wound down amidst tight inventory.
“It looked like the third-quarter rate dip wasn't as helpful for purchase lending as buyers kept facing elevated prices and low supplies of properties for sale," Barber said in the report.
The total monetary value of loans issued in Q3 reached $553.1 billion, a 2.9% increase from the second quarter and a 6.6% rise year-over-year. However, lending activity remained well below the highs of early 2021, when rates hovered around 3% and mortgage originations hit a peak of $1.3 trillion.
Read more: FHA and VA applications drive mortgage activity amid rising rates
While the Q3 increase marked a continuation of growth, overall mortgage activity was 60% below the first quarter of 2021. Tight housing inventory and elevated home prices continued to limit purchase loan activity, even as average 30-year mortgage rates dropped by a full percentage point in Q3.
The report also highlighted regional differences in lending trends. Of the 207 metropolitan statistical areas analyzed, 125 (60.4%) saw quarterly increases in mortgage activity. This growth reflects broad but uneven recovery as markets adjust to fluctuating rates and inventory constraints.
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