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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 60 July 2024 J O U R N A L REPORT SPOTLIGHTS MORTGAGE ORIGINATION MARKET'S STRUGGLES A ccording to ATTOM's latest Residential Property Mortgage Origination Report, a total of 1.28 million mortgages were originated in Q1 2024, representing a 6.8% decline from the previous quarter. The drop-off marked the 11th in the last 12 quarters, to the lowest level since 2000. In addition, this number left total residential lending activity down 4.8% year over year, and down 69.3% from the originations peak which occurred in 2021. It came amid another period of rising mortgage interest rates and elevated home prices unaffordable to significant portions of American households, on top of low supplies of homes for sale. According to ATTOM, ongoing decreases in lending activity during Q1 resulted from losses in all major categories of residential lending. Purchase loan activity went down another 9.9% quarterly, to about 565,000, while refinance deals dipped downward by 1.9%, to 491,000. Home-equity credit lines slipped 9%, to 222,000. In dollars, lenders issued $405.6 bil- lion worth of residential mortgages in Q1 2024; this number was down 4.8% from Q4 2023 and 4.5% from Q1 of last year. ATTOM further stated that varying paces of change among different loan types helped reduce the portion of all residential mortgages represented by pur- chase lending for the third straight quarter while pushing the refinance component upward. Yet, purchase loans were the most common form of mortgages in the country during the first quarter, comprising over 40%, followed by refinance packages and home-equity lending. "There is reason to hope that we will see something of a turnaround when second-quarter data comes in, given the jump in lending activity that happened during the peak home-buying season of 2023," said Rob Barber, CEO of ATTOM. "But with little sign that interest rates are coming down, which could fire up refinance and HELOC lending, or that supplies of homes for sale are going up, any increase is likely to be limited." Home mortgage lending took another hit in the early months of 2024 as average interest rates for 30-year fixed loans rose close to 7% and have since increased. That continued to push up home ownership costs at a time when near-record home prices in most of the country already were unaffordable, or a significant financial stretch, for average wage earners. Purchase lending was further eroded amid counts of homes for sale that were less than half the levels seen five years ago. Lending/Originations NEW HOME PURCHASE APPS SHOW YOY GAINS T he Mortgage Bankers Associa- tion (MBA) has released a report built on their Builder Applica- tion Survey (BAS) covering May 2024, which provides a picture of mortgage applications submitted for new home purchases. The monthly report revealed that compared to a month earlier in April, mortgage applications for newly built homes increased by 1% year over year— up by 13.8%. "There continues to be strength in the new home purchase market, as purchase applications increased in May compared to both the prior month and from a year ago," said Joel Kan, MBA's VP and Deputy Chief Economist. "With existing-home inventory still lagging in many markets, many homebuyers have turned their interest toward newly built homes, particularly FHA borrowers. The FHA share of applications was 26.5%, the highest share since the survey high of 27.1% in November 2023. The aver- age loan size was $400,150, a decline from last month's average of more than $405,000. MBA's estimate of new homes shows a slight increase to 702,000 units in May, the strongest pace since October 2023." New single-family home sales, which is a leading indicator of the Census Bureau's New Residential Sales Re- port—which is also a leading indicator of the real estate market in general—is that new single-family home sales were running at a seasonally adjusted annual rate of 702,000 units in May 2024. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regard- ing market coverage and other factors. The seasonally adjusted estimate for May is an increase of 0.4% from the April pace of 699,000 units. On an unadjusted basis, MBA estimates that there were 63,000 new home sales in May 2024, an increase of 1.6% from 62,000 new home sales in April.