High prices and rising rates continue to hamper affordability
Residential mortgage lending activity took another downturn in the fourth quarter of 2023, with more than 90% of metro areas reporting declines, according to the latest report from ATTOM. The slump marks the 10th decline in the past 11 quarters, with total lending volume falling 16.5% year-over-year.
The year proved challenging for lenders as elevated home prices, rising mortgage rates, and limited inventory continued to suppress buyer demand. With a total of 1,346,479 residential mortgages issued in the fourth quarter, lending activity continued to decline in the 184 metropolitan areas (96%) analyzed,
Lending activity for residential properties saw a 16.5% fall year-over-year and a dramatic 67.7% drop from the early 2021 peak. The decline spanned across all key types of residential lending: purchase loans, refinance deals, and home-equity lines of credit, all taking hits in the fourth quarter. Purchase loan activity fell by 18.4%, refinances by 7.9%, and home equity lines of credit by 12.7%.
“Multiple powerful forces continued to conspire against the mortgage industry during the fourth quarter, slicing back huge portions of their business,” Rob Barber, CEO of ATTOM, said in the report. “There were signs during the peak buying season of 2022 that things were starting to turn around, with increases in purchase, refinance and HELOC deals. That could happen again this year as we head into this year’s peak period, especially with interest rates coming down recently. But the fourth-quarter numbers revealed continued gloomy times for lenders, no matter how you sliced the pie.”
The total value of residential mortgages issued also took a dive, coming in at $417.4 billion, marking a decrease from both the previous quarter and the year before.
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Despite these shifts, the mix of mortgage types saw refinances climbing back to represent over one-third of all residential mortgage activity, a notable change from the surge seen three years earlier when interest rates were at their lowest.
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