Marketpulse Data: Home Lending Rebounds Nationwide

ATTOM released its second-quarter 2024 U.S. Residential Property Mortgage Origination Report, which shows that 1.62 million mortgages secured by residential property (1 to 4 units) were issued in the United States during the second quarter, representing a 23.2 percent increase over the prior three-month period.

The spike still left total residential lending activity down 1.6 percent from the second quarter of 2023 and 61.2 percent from a high point hit in 2021. But it marked the first gain in a year and boosted the number of residential loans back up close to the level from a year earlier. The rebound came amid a strong Spring home-buying season and mortgage interest rates that dipped downward after months of increases.

The increase in overall lending resulted from improvements across all major categories of residential loans, especially for home buying. Purchase-loan activity jumped 32.7 percent quarterly, to about 783,000, refinance deals rose by 10.3 percent, to about 546,000, and home-equity credit lines shot up 26.5 percent, to about 286,000.

Measured monetarily, lenders issued nearly $533 billion worth of residential mortgages in the second quarter of 2024. That was up 27.6 percent from the first quarter of 2024 and 1.1 percent from the second quarter of last year.

The varying increases among different loan types boosted the share of residential mortgages for home purchases, while reducing the proportion of refinancing loans. Purchase loans remained the most common form of mortgages around the U.S. in early 2024, comprising almost half of all mortgages, followed by refinance packages and home-equity lending.

“The mortgage industry got one of its biggest boosts in years during the second quarter, supported by a combination of the usual Springtime home-buyer demand coupled with more attractive mortgage rates,” said Rob Barber, CEO at ATTOM. “However, a cautionary note is warranted, as we shouldn’t read too much into one great quarter. A similar trend occurred last Spring, with lending dropping off significantly later in the year.  But with interest rates settling down and projections for more cuts from the Federal Reserve over the coming months, it wouldn’t be surprising if business increased even more for lenders over the rest of 2024, or at least didn’t drop significantly.”

Total lending recovers losses over the past year but remains well below peaks

Banks and other lenders issued a total of 1,615,281 residential mortgages in the second quarter of 2024, up from 1,311,377 in first quarter of 2024.

The latest total was still down slightly from 1,642,100 in the second quarter of 2023 and remained far behind a recent high point of 4,167,656 hit in the first quarter of 2021. But the recent gain mostly reversed three straight quarters of declines.

A total of $532.7 billion was lent to home owners and buyers in the second quarter of this year. That was up from $417.4 billion in the prior quarter and from $526.8 billion in the second quarter of 2023, although still less than half the recent peak of $1.3 trillion in 2021.

Overall lending activity followed a similar pattern at the metropolitan area level. The total rose from the first quarter to the second quarter of this year in 201, or 98 percent, of the 205 metropolitan statistical areas around the U.S. that had a population of 200,000 or more and at least 1,000 total residential mortgages issued from April through June of 2024. But it remained down from the second quarter of 2023 in 118, or 58 percent, of the metro areas analyzed.

The largest quarterly increases were in Boulder, CO (total lending up 106.5 percent from the first quarter of 2024 to the second quarter of 2024); Honolulu, HI (up 100.2 percent); Appleton, WI (up 63.1 percent); Sioux Falls, SD (up 56.8 percent) and Champaign, IL (up 54.7 percent).

Aside from Honolulu, metro areas with a population of least 1 million that had the biggest increases in total loans from the first to the second quarter of 2024 were San Jose, CA (up 46 percent); Minneapolis MN (up 44.3 percent); Indianapolis, IN (up 42.3 percent) and Boston, MA (up 35.4 percent).

The only metro areas with enough data to analyze where lending went down quarterly were Pensacola, FL (down 19.8 percent); Buffalo, NY (down 16.1 percent); Atlantic City, NJ (down 2.4 percent) and Springfield, IL (down 1.7 percent)

Measured annually, the largest declines in total lending among metro areas with a population of at least 1 million were in San Antonio, TX (total lending down 19.1 percent from the second quarter of 2023 to the second quarter of 2024); St. Louis, MO (down 14.9 percent); Austin, TX (down 13.9 percent); Dallas, TX (down 11.5 percent) and Buffalo, NY (down 11 percent).

Purchase mortgages, also up quarterly but slightly down annually, remain top loan type

The second-quarter purchase-loan total of 782,937 was up from 590,058 in the first quarter of 2024 while the $311 billion dollar volume of purchase loans was 39.2 percent higher than the $223.4 billion first-quarter level.

But the total was off 7 percent from 841,984 a year earlier and remained 50 percent lower than a high point hit in the Spring of 2021. The dollar amount was still off by 2.2 percent from $318.1 billion in the second quarter of last year and 42 percent beneath the 2021 peak.

Residential purchase-mortgage originations increased quarterly in 98 percent of the 205 metro areas in the report, while remaining down annually in 74 percent of those markets.

The largest quarterly increases were in Wichita, KS (purchase loans up 183.5 percent from the first quarter of 2024 to the second quarter of 2024); Boulder, CO (up 148.8 percent); Honolulu, HI (up 143.5 percent); Indianapolis, IN (up 86.8 percent) and Fort Wayne, IN (up 82.8 percent).

Aside from Honolulu and Indianapolis, the biggest quarterly increases in metro areas with a population of at least 1 million in the second quarter of 2024 came in San Jose, CA (up 68.5 percent); Boston, MA (up 65.9 percent) and Minneapolis, MN (up 60 percent).

The top annual decreases in purchase lending in metro areas with a population of at least 1 million were in San Antonio, TX (down 32 percent from the second quarter of 2023 to the second quarter of 2024); Dallas, TX (down 24 percent); Austin, TX (down 22.1 percent); Houston, TX (down 20.3 percent) and St. Louis, MO (down 19.6 percent).

The portion of all lending comprised by purchase mortgages rose for the first time in a year. It increased to 48.5 percent in the second quarter of 2024, from 45 percent in the prior quarter, although still down from 51.3 in the second quarter of 2023. Loans issued to buyers remained the most common loan category, way up from 29.7 percent in early 2021 when refinance deals were dominating the lending business.

Refinance mortgages turn back upward

Lenders issued 545,928 residential refinance mortgages in the second quarter of 2024. That was up from 494,862 in the first quarter of 2024 and 503,364 a year earlier.

The most recent figure represented the latest in a series of small comebacks after a spike in interest rates in 2021 and 2022 sent refinance lending downward by more than 80 percent.

The $168.1 billion dollar volume of refinance packages in the second quarter of 2024 was up 10.6 percent from $152 billion in the prior quarter and 8.5 percent from $155 billion in the second quarter of 2023.

Refinancing activity increased quarterly in 80 percent and annually in 76 percent of the metro areas around the U.S. with enough data to analyze.

The largest quarterly increases were in Honolulu, HI (refinance loans up 69.7 percent from the first quarter of 2024 to the second quarter of 2024); Sioux Falls, SD (up 54.5 percent); Boulder, CO (up 54.5 percent); Champaign, IL (up 53.1 percent) and Appleton, WI (up 50 percent).

Aside from Honolulu, metro areas with a population of least 1 million where refinance activity increased most quarterly were Providence, RI (up 29 percent); Minneapolis, MN (up 24.9 percent); Detroit, MI (up 24.7 percent) and Kansas City, MO (up 23.2 percent).

Metro areas with a population of least 1 million and the largest year-over-year increases in the number of refinance loans were Honolulu (up 43.9 percent from the second quarter of 2023 to the second quarter of 2024); Birmingham, AL (up 28.8 percent); Phoenix, AZ (up 26.9 percent); Las Vegas, NV (up 26.8 percent) and Tucson, AZ (up 26.7 percent).

Refinance packages comprised 33.8 percent of all loan originations in the second quarter of 2024. That was down from 37.7 percent in the prior quarter and far less than the 65.8 percent portion in the first quarter of 2021.

HELOC lending also climbs, nearly reaching levels from a year earlier

Home-equity lines of credit (HELOCs) also increased, going from 226,417 in the first quarter of 2024 to 286,416 in the second quarter. The improvement nearly wiped away losses sustained over the prior year, approaching the figure of 296,752 in the second quarter of 2023.

The $53.6 billion volume of HELOC loans in the second quarter of 2024 was up from $42 billion in the prior three-month period, almost equaling the $53.7 billion lent in the second quarter of last year.

HELOCs comprised 17.7 percent of all loans in the most recent quarter. That was down from 18.1 percent in the second quarter of 2023 but was still almost four times the level recorded in 2020.

HELOC mortgage originations increased from the first quarter to the second quarter of 2024 in 98 percent of the metro areas analyzed. The largest quarterly increases in metro areas with a population of at least 1 million were in Rochester, NY (up 49.6 percent); Detroit, MI (up 47.6 percent); Minneapolis, MN (up 40.6 percent); Milwaukee, WI (up 38.3 percent) and Grand Rapids, MI (up 38.2 percent).

FHA and VA loan percentages decline

Mortgages backed by the Federal Housing Administration (FHA) decreased in the second quarter of 2024 as a percentage of all home loans after 10 straight quarterly increases. They accounted for 223,919, or 13.9 percent, of all residential property loans originated in the second quarter of 2024. That was down from 16.4 percent in the first quarter of this year, although still up from 13.6 percent in the second quarter of 2023.

Residential loans backed by the U.S. Department of Veterans Affairs (VA) totaled 81,864, or 5.1 percent, of all residential property loans originated in the second quarter of 2024. That was down from 5.4 percent in both the previous quarter and the second quarter of 2023.

Typical purchase loan and down-payment percentage increase along with home prices

As the national median home price hit a new high in the second quarter of 2024, the typical single-family home loan and median down-payment percentage both rose.

Among homes purchased with financing in the second quarter of 2024, the median loan amount climbed to $368,207. That was up 7.2 percent from $343,561 in the prior quarter and 8.4 percent from $339,625 a year earlier.

Also rising was the median down payment, going up 11.1 percent quarterly, to $24,250; although it was still down 7.7 percent from a year earlier.