U.S. Lending Plummets 70% Following Pandemic Homebuying Surge – The UBJ – United Business Journal
In the first quarter of 2024, the U.S. residential property mortgage origination landscape witnessed a dramatic downturn, as revealed by ATTOM’s comprehensive report. This decline in mortgage lending marked a significant departure from the fervent homebuying activity observed during the pandemic-induced frenzy of 2021, which had propelled housing prices to unprecedented heights.
The report unveiled a staggering 70% plummet in home mortgage lending from the peak levels witnessed in 2021. Such a sharp decline underscored a pronounced shift in the housing market dynamics. Residential mortgage lending experienced a notable 7% drop during the first quarter of 2024, hitting its lowest point since the turn of the millennium. Lenders issued approximately 1.28 million residential mortgages valued at $405.6 billion during this period, reflecting a substantial 4.8% decrease compared to the preceding year.
Several intertwined factors contributed to this downward trajectory in mortgage lending activity. Chief among them were the persistently high mortgage interest rates, which had surged to as high as 7%, significantly impacting affordability for many American households. Furthermore, the soaring prices of residential properties, exacerbated by a severe shortage of available homes for sale, further dampened the demand for mortgages.
Despite the overall downturn in lending, there were pockets of optimism regarding a potential turnaround in the subsequent quarters. ATTOM’s CEO, Rob Barber, cautiously noted a surge in lending activity during the peak homebuying season of 2023. However, he tempered expectations by highlighting the challenges posed by ongoing high-interest rates and the persistent scarcity of housing inventory, which could potentially limit any substantial increase in lending activity.
Purchase mortgages, the primary loan type sought by homebuyers, experienced a widespread decline across various regions of the United States. This decline marked the third consecutive quarter of diminishing loan volumes following the surge observed in the previous spring. Cities such as Wichita, Kansas; Mobile, Alabama; St. Louis; Manchester, New Hampshire; and Buffalo, New York, witnessed the most significant quarterly decreases in purchase loan volumes.
Conversely, while refinance mortgages showed a year-over-year increase, they remained below their peak levels observed in early 2021. This period had seen mortgage rates plummeting below 3%, triggering a surge in refinance deals. Despite the uptick in refinance mortgage volumes compared to the previous year, the numbers paled in comparison to the peak levels witnessed during the aforementioned period.
Overall, the report shed light on the prevailing challenges within the U.S. mortgage market, characterized by reduced lending activity amid high-interest rates and soaring property prices. Despite some positive indicators, such as a rise in refinance mortgages year over year, the mortgage market continues to grapple with headwinds that significantly impact borrowing trends and homeownership aspirations nationwide.
