Fewer people are buying homes—and it's reshaping the loan landscape
The US residential mortgage market experienced a significant downturn in the first quarter of 2025, largely driven by a sharp decline in home purchase loans, according to a report by ATTOM. The data indicates a broader shift in borrower behavior that could reshape the mortgage industry.
Overall, 1.4 million mortgages were secured by residential property in Q1 2025, marking a 14% drop from the previous quarter. This figure has fallen below pre-pandemic levels, signaling a cooling in what was once a “red-hot” housing market.
The most notable impact on the mortgage market has been attributed to the 20% decrease in home purchase loans, which fell to 593,111 in Q1 from 738,675 in Q4 2024. This reduction in homebuying activity directly affects lenders who rely on new purchase originations.
Refinancing and HELOCs gain ground
Conversely, while also declining, mortgage refinancing deals and home equity lines of credit (HELOCs) are gaining a larger share of the market. Refinances fell by 12% and HELOCs by 5% quarter-over-quarter. Rob Barber, CEO at ATTOM, noted, “Rather than borrowing money to buy a new property, the data shows homeowners are increasingly looking to restructure their existing mortgages or borrow equity from their homes to cover other expenses.” He added that if this trend persists, refinancing deals could soon dominate the home loan market.
The total dollar value of loans plummeted by 18%, from $582 billion in Q4 2024 to $478 billion in Q1 2025. This not only reflects fewer borrowers but also a decrease in the average loan amount, as typically smaller refinancing and HELOC deals constitute a growing proportion of the market. Home purchase loans, which comprised over half of all mortgages in Fall 2023, now account for 41.4% of the market.
Analysts see long-term shift
The slowdown was widespread, with 93.3% of 193 metropolitan statistical areas analyzed by ATTOM experiencing a quarterly decline in issued mortgages. The report noted that this broad impact suggests that the shifts are not localized but rather reflect national trends in consumer confidence, interest rates, and housing affordability.
The decline also extended to government-backed loans, with Federal Housing Administration (FHA) loans dropping 8.8% from Q4 and US Department of Veterans Affairs (VA) loans falling 27.2%.
ATTOM’s report analyzed mortgage and deed of trust data for various residential properties, including single-family homes, condos, townhomes, and multi-family properties with two to four units. Each mortgage or deed was counted as a separate loan. The dollar volume was found by multiplying the total loans by their average amount.
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