Marketpulse Data: LenderLogix Report Shows Slight Decline In Home Buying Activity

LenderLogix, a provider of mortgage point-of-sale and automation software for banks, credit unions, independent mortgage banks, and brokers, today announced the latest release of the Homebuyer Intelligence Report, a quarterly summary of insights into borrower behavior during the home buying process based on data collected by the LenderLogix suite of tools. The latest report covers data collected during the pre-approval and borrower application process during the third quarter (Q3) of 2023.

Pre-Approvals

In Q3 2023, borrowers generated 45,527 pre-approval letters through LenderLogix’s QuickQual pre-approval platform, a decrease of nearly 23% from Q2. The average of pre-approved borrowers per loan officer decreased by 11.6% from 28 in Q2 to just over 24 in Q3.

The average pre-approval letter loan amount in Q3 also decreased slightly by 2.5% to $295,312 compared to Q2’s average loan amount of $302,836. However, the average sales price stayed nearly the same, decreasing less than 1% from $348,348 in Q2 to $345,031 in Q3, with an average down payment size of 14.5%.

Conventional loans remained the most popular loan type for pre-approved borrowers, with its share slightly rising to 75% versus 71% in Q2. FHA pre-approvals slightly declined to 19% versus 22% in Q2, as did VA (4%) and USDA share (1%).

“Overall, Q3 showed higher down payments, with fewer home shoppers in the market than last quarter, which makes sense given that it is continually getting more expensive for consumers to purchase a home,” said LenderLogix Co-Founder and CEO Patrick O’Brien. “As we enter into historically lower volume months, lenders will need to continue to be diligent in equipping themselves with the tools and resources necessary to make home buying more affordable and educate potential borrowers along the way.”

Borrower Conversion

Of the borrowers using QuickQual in Q3 2023, the average number of days between pre-approval and loan submission increased incrementally to 89.8 days, compared to 89.3 days in Q2. The most prolonged duration between pre-approval and application also increased to 1,274 days in Q3 from 994 days in Q2. While the increased length between pre-approval and loan submission did not dissuade borrowers in Q2, the same cannot be said for Q3, as conversions from borrowers using QuickQual declined from 58% in Q2 to 53% in Q3. Within this subset, borrowers generated an average of 8.57 pre-approval letters before converting.

“While the overall number of potential homebuyers is down, ‘patience’ seems to be the mantra for those still in the market, and lenders would do well to follow suit, as industry analysts have revised their forecasts to reflect a tough Q4 and Q1,” O’Brien added. “Though there may be fewer buyers and the road to purchase longer than anyone would like, there is still business out there for lenders to capture, and proactive, ongoing communication and education will be key to prospect retention and conversion.”