by ATTOM Staff
U.S. Residential Mortgage Market Overview for Q3 2023
The U.S. residential mortgage market faced notable changes in the third quarter of 2023, as outlined in ATTOM’s latest report.
Mortgage Issuance Declines
In Q3 2023, the U.S. residential mortgage market experienced a 3% decline in mortgage issuance compared to the previous quarter. This marks a continuation of a trend seen over the past two years, with only one quarter – Q2 2023 – bucking the downward trajectory.
The impact of this decline is significant, with total residential lending activity plummeting by 26% compared to the same period last year and a staggering 63% drop from the peak observed in 2021.
Refinance, Purchase and HELOCs
Refinance mortgage originations inched up for the second consecutive quarter following a two-year downward trend. In Q3 2023, lenders issued 516,461 residential refinance mortgages, marking a 5% increase from the previous quarter. However, refinance activity remained significantly lower, down 25% from the same period in 2022 and a substantial 81% less than the peak observed in Q1 2021.
Purchase mortgages, after a surge of nearly 30% in Q2 2023, declined by 7% in the third quarter, with lenders originating 751,720 purchase mortgages.
Home-equity lines of credit (HELOCs) also decreased in the third quarter, with a 7% drop compared to the previous quarter, partially reversing gains from Q2.
FHA and VA Loans, Purchase Loan Amounts
Mortgages backed by the Federal Housing Administration (FHA) continued their upward trajectory, accounting for 15.2% of all residential property loans originated in Q3 2023. This marks the eighth consecutive quarter of growth.
In contrast, residential mortgage loans backed by the U.S. Department of Veterans Affairs (VA) decreased, representing 4.9% of all residential property loans originated in the same period.
Lastly, while the median single-family home loan amount saw a slight decrease to $319,500 in Q3 2023, down payment percentages increased, with the typical down payment rising to 9.2% of the median purchase price.
In summary, the third quarter of 2023 presented a challenging landscape for the mortgage market, characterized by declining lending activity, increased interest rates, and evolving borrower preferences. Stability may emerge as the housing market enters the fall season, contingent on interest rates remaining steady.
To learn more and access more detailed data or get the data behind the stories, contact one of ATTOM’s data experts.