Home Lending Hits Rock Bottom: Two-Decade Low As Buying, Refinancing And Equity Loans Plummet

Home lending is near a two-decade low, with purchasing, refinancing and home equity lending all declining.

Mortgages secured by residential properties of one to four units declined 13.8% from the third quarter of 2023 to 1.35 million in the fourth quarter, according to real estate data provider ATTOM's fourth-quarter 2023 U.S. Residential Property Mortgage Origination Report.

After another period of high home prices and mortgage rates coupled with low for-sale home inventory, residential lending was down 16.5% from a year ago and 67.7% from a high hit in the first quarter of 2021.

"Multiple powerful forces continued to conspire against the mortgage industry during the fourth quarter, slicing back huge portions of their business," ATTOM CEO Rob Barber said.

Average interest rates for 30-year fixed loans rose to between 7% and 8% at the end of 2023, prompting home mortgage lending to fall and driving home ownership costs up at a time when record home prices across most of the country already were unaffordable.

Lenders issued $417.4 billion in residential mortgages in the fourth quarter, down 14.9% from $490.3 billion in the third quarter and 18.6% from $512.7 billion in the fourth quarter of 2022.  

The largest quarterly declines were in Anchorage Alaska, down 45.3% from the third quarter; St. Louis, down 42%; Charleston, South Carolina, down 33.5%; Rochester, New York, down 31.5%; and South Bend, Indiana, down 25.7%.

Residential refinance mortgages in the fourth quarter stood at 487,671, down from 529,683 in the third quarter and down 5.3% from 514,915 in the fourth quarter of 2022. The largest quarterly declines were in Anchorage, Alaska, down 46.9%; St. Louis, down 39.2%; South Bend, Indiana, down 35%; Rochester, New York, down 31.5%; and Tulsa, Oklahoma, down 17.1%.

Home equity line of credit (HELOC) lending also fell, decreasing to 240,564 in the fourth quarter from 275,551 in the third quarter. HELOCs were down 25.6% from 323,369 a year earlier.

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"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," Barber said. "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."

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