Residential Mortgage Originations Spike in Q2

The second quarter of 2024 has seen a sharp increase in residential mortgage originations across the nation, with loans totaling nearly $533 billion– a dollar value soaring 27.6% above first-quarter levels, a new report from ATTOM shows.

The 1,615, 281 mortgages issued also rose 23.2% above the previous quarter’s figures. These results were what ATTOM called one of the mortgage industry’s biggest boosts in years. Still, they remained well below previous peaks.

“A cautionary note is warranted, as we shouldn’t read too much into one great quarter,” warned ATTOM’s CEO Rob Barber, noting that a similar outbreak of lending last spring later fizzled.

“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 report said.

By loan type in the second quarter, home loans rose 32.7% to 783,000, refinancing deals jumped 10.3% to 546,000 and home-equity credit lines were up 26.5% at 286,000.

Lending activity climbed in 98% of the 205 metros in the U.S., with populations greater than 200,000. However, they were still below 2Q 2023 levels in 58% of them. In 2Q 2024, Boulder and Honolulu each saw lending double. Significant increases also flowed into Appleton, WI, Sioux Falls, SD, and Champaign, IL. Among metros with populations of at least one million, the big gainers were San Jose, Minneapolis, Indianapolis, and Boston.

Lending was down in the quarter in Pensacola, Buffalo, Atlantic City and Springfield, IL. Over a year, the biggest losers among major metros were San Antonio, St. Louis, Austin, Dallas and Buffalo.

Nationally, the number of home purchase loans rose from 590,000 in 1Q 2024 to 782,937 in 2Q 2024. Their value soared accordingly by 39.2% from $223.4 billion in the period. Still, these levels were below those reached a year earlier and well below their 2021 peak.

“The portion of all lending comprised by purchase mortgages rose for the first time in a year,” the report noted. “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.”

Refinancing also increased, with 545,928 such loans issued, with a dollar value of $168.1 billion.

“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 report stated. “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.”

The $53.6 billion value of home-equity lines of credit (HELOCS) granted in the second quarter was nearly enough to wipe away losses sustained during the prior year, according to the report. HELOCs represented 17.7% of all loans in 2Q 2024.

After 10 successive increases in the share of FHA-backed loans as a percentage of all home loans, their share fell to just 13.9% in the second quarter. The percentage of VA loans also slipped, to account for only 5.1% of all residential loans.

As others have done, ATTOM’s report also pointed to the continuing spike both in the size of loans homebuyers have to seek and the down payments they have to come up with to make ownership possible.

“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,” ATTOM reported.