Mortgage originations fell but refinance activity hit its highest level since mid-2022
Refinance activity continued its upward trend in the fourth quarter of 2024, defying a broader decline in mortgage lending, according to ATTOM’s latest US Residential Property Mortgage Origination Report.
Lenders issued 1.64 million mortgages secured by residential properties between October and December, down 3.3% from Q3 2024 but up 14% from the previous year.
Home purchase and home-equity lending both saw notable drops. Mortgage loans for home purchases fell 7.5% from Q3 to 731,517, while home equity lines of credit (HELOCs) declined 11.6% to 267,000 loans.
"The in-boxes of mortgage lenders emptied out a bit during the Fall of 2024 following a couple of strong quarters that had pointed to a possible revival for the industry," ATTOM CEO Rob Barber said in the report. “Things slowed down as the market remained tight and the cost of borrowing went back, all during the usual annual home-buying lull.”
While the total number of residential mortgages, refinance loans bucked the trend, increasing for the third consecutive quarter. The number of refinance mortgages rose 6.4% from Q3 to 641,918, marking a 28.2% jump year over year – the highest level since mid-2022.
"One small surprise emerged with refinancings increasing again despite rising interest rates,” Barber added. “That may have happened because rates started the quarter at one of the more attractive points over the past few years, suggesting that homeowners were trying to get their mortgages reset before borrowing costs went back up."
Even after the quarter ended, refinance activity remained elevated. As of February 21, refinance applications were up 5% month over month and 50.9% year over year, according to Fannie Mae’s Refinance Application-Level Index (RALI).
While refinance activity has been gaining momentum, mortgage lending remains far below its pandemic-era highs. The total $568 billion in mortgage loans issued in Q4 was up 1.4% from Q3 and 26.3% from Q4 2023.
However, that figure is still less than half the $1.3 trillion peak reached in 2021. Home purchase loans, though up annually by 6.4%, still sit well below their 2021 high of 1.6 million loans.
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Although overall lending declined in Q4, experts believe the slowdown may be temporary.
"Forces remain in places for lending to remain slow. But the fallback was modest, and the trend should turn back around to some degree over the coming months as the weather warms and home buying heats back up, especially if mortgage rates settle down," Barber said.
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