Mortgage Lending Surges Again: A 3-Year High You Can’t Ignore!
Exciting news in the housing market! For the second quarter running, mortgage issuances have surged, marking a trend we haven’t seen in three years. This comes from the latest insights we’ve gathered on loan origination.
In the third quarter of 2024, a remarkable 1.67 million mortgages were issued, reflecting a 1.9% jump compared to both the previous quarter and last year. However, while we’re witnessing this uptick, the numbers still trail behind the frenzy of spring 2024 and are significantly lower than the record highs we experienced in 2021, where the interest rates hovered around 6%—not exactly thrilling for many hopeful homeowners.
What’s driving this increase? It’s primarily the refinancing and home equity lending, rather than an influx of new buyers diving into the market. Lenders issued a whopping $550 billion in mortgage loans in Q3 2024, which is up 2.9% from Q2 and 6.6% from the same time last year.
There’s an interesting divide among mortgage types: nearly half of the loans were for home purchases, while the other half consisted of refinances and home equity credit lines.
“Mortgage lending has seen an increase in the third quarter, but it’s not at the breakneck pace we witnessed during the Spring spike,” said an industry expert. “This modest rise seems to stem mostly from homeowners swapping their high-rate loans from 2021 and 2022 for more affordable options due to falling rates. However, despite the rate dip, potential homebuyers are still grappling with soaring prices and a lack of available properties.”
The total mortgages issued by banks and lenders ticked up to 1,666,816 in Q3 2024—an increase from 1,636,073 in Q2 and up from 1,635,056 in Q3 2023. This growth marks the first time in nearly three years that we’ve seen back-to-back quarters of increased lending activity.
However, it’s essential to remember that we’re still lagging behind the pandemic peak, where over 4 million mortgages were issued in the first quarter of 2021, driven by a much more favorable interest rate at just 3%. In Q3 2024, $553.1 billion was lent to homeowners and buyers, up from $537.5 billion in Q2 and $518.6 billion in Q3 2023, yet still less than half of the astounding $1.3 trillion dispensed in 2021.
Regionally, lending activity has also shown signs of life, with 125 out of 207 metros experiencing increases. Anchorage, Alaska led the charge with a staggering 78.6% rise in lending from quarter to quarter, followed by Yuma, Arizona at 33.3%, and Ann Arbor, Michigan at 33%.
While overall lending is on the rise, the number of mortgages issued to homebuyers has actually dipped both quarterly and annually. When compared to 2021, the number of purchase loans has been halved, with Q3 reporting only 782,220—down from 796,046 in Q2 and 814,610 in Q3 2023, far below the 1.6 million seen in mid-2021.
The dollar volume of purchase loans totaled $306.6 billion in Q3, a slight decline of 2.5% from $314.3 billion in Q2, although it did see a year-over-year increase from $304.1 billion in Q3 2023. Still, it’s important to note that this number remains a whopping 43% beneath the peak levels we saw in 2021.
In terms of refinances, lenders issued 587,691 residential refinance mortgages in Q3, marking a rise from 549,812 in Q2 and from 539,738 in the same period last year. This is the highest number we’ve seen since Q3 2022, as homeowners look to capitalize on more favorable refinancing options.
The most significant quarterly increases for metros in terms of refinance loans were seen in Anchorage, Alaska (up 59.1% from Q2), Ann Arbor, Michigan (up 46.9%), and Vallejo, California (up 46.7%).
To dive deeper into the full report, click here.
