Picture a year where the mortgage industry saw its total lending volume plummet by over a third to $1.88 trillion as soaring interest rates above 7% not only crushed refinancing activity to a 28-year low but also sparked a seismic shift where purchase loans dominated 85% of the market, revealing a landscape of both steep declines and surprising pockets of growth from FHA loans to reverse mortgages.
Key Takeaways
- In 2023, total U.S. mortgage originations volume reached $1.88 trillion, a 35% decline from 2022 due to higher interest rates
- Purchase mortgage originations in Q4 2023 totaled $456 billion, representing 85% of total originations as refinancing activity dropped sharply
- Refinance originations fell to $123 billion in 2023, the lowest since 1995 excluding crisis years, driven by rates above 7%
- 30-year fixed mortgage rates averaged 6.81% in 2023, up from 5.34% in 2022
- 15-year fixed rates hit 6.16% average in 2023
- ARM rates averaged 6.45% in 2023, with 5/1 ARMs most popular
- Serious delinquency rate for mortgages was 0.87% in Q4 2023, lowest in decades
- Overall delinquency rate stood at 3.92% in Q4 2023, down 14 bps QoQ
- FHA delinquency rate was 10.48% in Q3 2023, highest among sectors
- United Wholesale Mortgage held 8.5% market share in originations for 2023
- Rocket Mortgage captured 6.2% of total volume in 2023, down from 10% in 2021
- LoanDepot originated $58 billion in 2023, 3.1% share
- First-time homebuyers comprised 26% of purchase loans in 2023, down from 32% pre-pandemic
- Median age of homebuyers rose to 56 in 2023 from 49 in 2019
- 38% of buyers were millennials (born 1981-1996) in 2023
Rising interest rates significantly reshaped the 2023 mortgage market, driving down overall volume.
Borrower Demographics
- First-time homebuyers comprised 26% of purchase loans in 2023, down from 32% pre-pandemic
- Median age of homebuyers rose to 56 in 2023 from 49 in 2019
- 38% of buyers were millennials (born 1981-1996) in 2023
- White borrowers received 72% of 2022 originations by volume
- Hispanic buyers share increased to 19% of transactions in 2023
- Median FICO score for purchase loans was 754 in Q4 2023
- 24% of 2023 buyers were single females, up from 19% in 2019
- Average down payment was 14% for all buyers, 7% for first-timers in 2023
- 68% of repeat buyers used conventional loans in 2023
- Black borrowers' denial rate was 14.1% in 2022 HMDA data
- 62% of buyers under 35 had student debt averaging $33,000 in 2023
- Veteran borrowers took 9% of purchase loans in 2023
- Median household income for buyers was $107,000 in 2023, up 5%
- 15% of 2023 loans went to LMI (low-moderate income) borrowers
- Female-headed households 34% of FHA borrowers in 2023
- 81% of buyers were married couples in 2023
- Asian buyers median income $125,000, highest demographic in 2023
- Debt-to-income ratio averaged 36% for 2023 originations
- 43% of first-time buyers delayed purchase due to affordability in 2023
- Rural borrowers 12% of volume, urban 65% in 2023 HMDA
- Self-employed borrowers share rose to 11% in 2023
- Gen Z buyers tripled to 5% of market in 2023
- Repeat buyer LTV averaged 80% in 2023
- 28% of buyers rented previously for 5+ years in 2023
- Borrowers over 65 were 22% of reverse mortgage applicants in 2023
- Median borrower age for jumbo loans was 48 in 2023
- LGBTQ+ buyers 4% of market, higher denial rates at 11%
Borrower Demographics Interpretation
While America’s homebuyers are growing older, richer, and more likely to be a single woman, first-timers are getting squeezed out, leaving the market to repeat buyers with conventional loans, as the path to homeownership narrows for younger, less wealthy, and minority borrowers.
Delinquency and Foreclosure
- Serious delinquency rate for mortgages was 0.87% in Q4 2023, lowest in decades
- Overall delinquency rate stood at 3.92% in Q4 2023, down 14 bps QoQ
- FHA delinquency rate was 10.48% in Q3 2023, highest among sectors
- VA delinquency rate dropped to 4.15% in Q4 2023
- Conventional delinquency rate was 2.67% in Q4 2023
- Foreclosure starts rate was 0.10% in Q4 2023, near historic lows
- 90+ days delinquent loans totaled 364,000 in Q4 2023, down 5%
- Subprime mortgage delinquency rate was 7.2% in 2023 average
- New foreclosure actions fell 12% YoY to 75,000 in 2023
- Early-stage delinquency (30-59 days) was 1.98% in Q4 2023
- FHA seriously delinquent loans decreased 18% YoY to 420,000 in Q4 2023
- Properties in foreclosure inventory at 0.29% nationwide in Q4 2023
- GSE delinquency rate was 0.95% in November 2023
- Jumbo delinquency rate remained at 0.45% in 2023, lowest segment
- Forbearance exits exceeded new requests 5:1 in 2023, rate <0.3%
- Modification volume was 112,000 loans in 2023, down 20%
- REO inventory declined 25% to 140,000 properties in Q4 2023
- Delinquency rate for 2021 originations was 0.72% in Q4 2023
- COVID forbearance portfolio shrank to 55,000 loans by end-2023
- Short sales as resolution were 1.2% of distressed in 2023
- 60+ days delinquency rate was 1.05% in Q4 2023 for prime loans
- Foreclosure sales totaled 28,000 in Q4 2023, down 10% QoQ
- Delinquency transition rates remained low at 1.8% in 2023
- Non-agency RMBS delinquency averaged 4.2% in 2023
- Bankruptcy filings impacting mortgages fell 15% in 2023 to 250,000
- Loss mitigation actions covered 92% of at-risk borrowers in 2023
- Ginnie Mae delinquency rate was 11.3% in December 2023
- Prepayment speeds slowed to 5 CPR in Q4 2023 due to high rates
Delinquency and Foreclosure Interpretation
While the overall mortgage market shows remarkable health with most metrics at or near record lows, a few key cracks appear—most notably in the FHA sector, which continues to carry a delinquency burden over ten times that of pristine conventional loans.
Interest Rates and Refinancing
- 30-year fixed mortgage rates averaged 6.81% in 2023, up from 5.34% in 2022
- 15-year fixed rates hit 6.16% average in 2023
- ARM rates averaged 6.45% in 2023, with 5/1 ARMs most popular
- Refinance share of applications dropped to 0.3% in December 2023, lowest on record
- Mortgage rates peaked at 7.79% on October 23, 2023, highest since 2000
- Effective mortgage rate spread over Treasuries widened to 2.85% in 2023 from 1.7% in 2021
- Jumbo 30-year rates averaged 7.02% in 2023
- FHA 30-year rates were 6.95% average in 2023
- VA 30-year rates averaged 6.75% in 2023, lower than conventional
- Weekly mortgage applications for refi fell 85% YoY in Q4 2023
- 2023 average APR on 30-year fixed was 6.95%, including fees
- Rates dipped to 6.45% in late December 2023, sparking 20% app increase
- 5/1 ARM share rose to 15% of locked apps in Q4 2023
- Mortgage points averaged 0.7 in 2023 for purchase loans
- Refi cash-out volume was $112 billion in 2023, down 40%
- Rate/term refi applications near zero at 0.2% share in mid-2023
- 7/1 ARM rates averaged 6.55% in 2023
- Bond market yields drove 30-year rates up 150 bps in 2023
- Discount points usage fell to 25% of borrowers in 2023 from 35% in 2022
- FHA streamline refi volume dropped 60% to $45 billion in 2023
- VA IRRRL refis totaled $78 billion in 2023, down 25%
- Average lender yield on 30-year fixed was 6.92% in Q4 2023
- Rates forecast for 2024 average 6.4% by MBA, impacting refi outlook
- HAMP refi program saw minimal uptake in 2023 due to high rates, under $1 billion
- Non-agency refi originations were $23 billion in 2023
- Rate lock volume declined 32% YoY in 2023 to $1.65 trillion
Interest Rates and Refinancing Interpretation
The market's ruthless 2023 rate hike essentially put the entire mortgage industry on a 'cash-only' diet, choking refinances to a record low and forcing even loyal homeowners to flirt with adjustable-rate options just to afford a bite of the housing pie.
Lender Market Share
- United Wholesale Mortgage held 8.5% market share in originations for 2023
- Rocket Mortgage captured 6.2% of total volume in 2023, down from 10% in 2021
- LoanDepot originated $58 billion in 2023, 3.1% share
- Chase Bank mortgage share was 4.8% with $90 billion volume
- PennyMac Corp led non-bank lenders with 4.2% share in 2023
- Wells Fargo originated $78 billion, 4.1% share despite scaling back
- Bank of America share fell to 2.9% with $55 billion volume
- Fairway Independent had 1.8% share, $34 billion originated
- Correspondent channel share rose to 65% of GSE deliveries in 2023
- Credit unions captured 7% market share in 2023, up from 5%
- Quicken Loans (Rocket) refi share was 12% pre-2023 slowdown
- Navy Federal Credit Union grew to 1.5% share with $28 billion
- Retail channel declined to 22% of originations in 2023
- Broker channel handled 18% of volume in 2023
- Mr. Cooper (Nationstar) had 2.7% share in servicing transfers
- Top 10 lenders controlled 45% of 2023 originations
- Non-depository independents held 55% market share in 2023
- CitiMortgage share dropped to 1.2% with $22 billion
- Guild Mortgage originated $25 billion, 1.3% share
- Wholesale lenders gained 3% share in GSE space to 38% in 2023
- US Bank mortgage volume was $42 billion, 2.2% share
- Caliber Home Loans had 1.1% share, $20 billion originated
- Servicer market concentration: top 5 held 40% of $12.5T unpaid principal
- Independent mortgage banks (IMBs) share fell to 52% in 2023 from 60%
- PNC Bank 1.0% share with $19 billion
- NewRez (Rithm) 1.4% share
Lender Market Share Interpretation
The once-fragmented mortgage arena is now a consolidation brawl where non-bank upstarts have seized the majority, leaving traditional banks to watch their share erode as the correspondent channel quietly hoards two-thirds of the business like a dragon on a pile of GSE gold.
Market Volume and Originations
- In 2023, total U.S. mortgage originations volume reached $1.88 trillion, a 35% decline from 2022 due to higher interest rates
- Purchase mortgage originations in Q4 2023 totaled $456 billion, representing 85% of total originations as refinancing activity dropped sharply
- Refinance originations fell to $123 billion in 2023, the lowest since 1995 excluding crisis years, driven by rates above 7%
- FHA mortgage originations volume was $512 billion in 2023, accounting for 27% of the total market
- VA loan originations reached $189 billion in 2023, up 5% year-over-year despite market contraction
- Conventional conforming loan originations totaled $1.05 trillion in 2023, dominating the market at 56%
- Jumbo mortgage originations volume was $278 billion in 2023, a 22% decrease from 2022
- Total mortgage applications surged 49% week-over-week in early January 2024 after rate dip
- Q1 2023 originations hit $599 billion, highest quarterly volume despite rising rates
- Non-QM originations grew to $45 billion in 2023, up 15% amid tighter underwriting
- Reverse mortgage originations increased 12% to $12.8 billion in 2023
- Multifamily mortgage originations rose 8% to $650 billion in 2023
- Ginnie Mae-guaranteed originations volume was $712 billion in 2023, 38% of total
- GSE (Fannie/Freddie) originations totaled $1.2 trillion in 2023
- Mortgage originations per 1,000 households dropped to 45 in 2023 from 72 in 2022
- Q2 2023 purchase originations were $389 billion, down 18% QoQ
- 2022 total originations peaked at $2.9 trillion, highest since 2005 excluding refi boom
- First-time buyer originations share was 28% of purchase volume in 2023
- Adjustable-rate mortgage (ARM) originations surged to 10% market share in 2023 from 2% in 2022
- Q3 2023 total originations fell to $412 billion, lowest since Q2 1997
- Portfolio lender originations held steady at $156 billion in 2023
- Credit union mortgage originations grew 4% to $112 billion in 2023
- Bank-held mortgage originations declined 28% to $345 billion in 2023
- 2023 mortgage debt outstanding reached $12.35 trillion, up 4% YoY
- Home equity line of credit (HELOC) originations doubled to $45 billion in 2023
- Q4 2022 originations were $789 billion, boosted by refi rush
- Manufactured home mortgage originations totaled $28 billion in 2023
- Investor property purchase loans were 22% of originations in 2023
- Bridge loan originations for mortgages hit $15 billion in 2023
- Correspondent lending channel handled 62% of 2023 originations
Market Volume and Originations Interpretation
The 2023 mortgage market staged a reluctant coup, where higher rates dethroned the refinancing royalty, forced homebuyers to rule the purchase kingdom with grit, and left niche products to quietly expand their borders in a shrunken $1.88 trillion empire.
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