While mortgage originations have fallen to their lowest level since the 1990s, the 2024 market is a story of stark contrasts where soaring FHA and VA lending meets near-record rates and shifting borrower demographics.
Key Takeaways
- In Q2 2024, total U.S. mortgage originations declined 4% quarter-over-quarter to $769 billion, marking the lowest level since 1996 excluding the pandemic era.
- Purchase mortgage originations in June 2024 fell 7% month-over-month to $1.02 trillion annualized pace.
- Refinance originations dropped 12% in Q1 2024 to $187 billion, the lowest in over two decades.
- 30-year fixed mortgage rates averaged 6.95% in June 2024.
- 15-year fixed rates hit 6.25% average in Q2 2024.
- ARM rates averaged 7.15% for 5/1 ARMs in July 2024.
- Serious delinquency rate for prime mortgages was 0.65% in Q1 2024.
- Overall mortgage delinquency rate fell to 3.62% in Q4 2023.
- FHA delinquency rate stood at 10.88% in March 2024.
- Case-Shiller Home Price Index rose 6.5% YoY in May 2024.
- Median home sales price hit $417,700 in Q2 2024.
- FHFA House Price Index increased 5.2% YoY in Q1 2024.
- Average FICO score for mortgage originations was 753 in Q1 2024.
- 24% of 2023 originations went to borrowers with 760+ FICO.
- Millennial share of homebuyers was 38% in 2023 NAR survey.
Mortgage originations fell sharply while rates remained stubbornly high in mid-2024.
Borrower Demographics and Lending Practices
- Average FICO score for mortgage originations was 753 in Q1 2024.
- 24% of 2023 originations went to borrowers with 760+ FICO.
- Millennial share of homebuyers was 38% in 2023 NAR survey.
- Debt-to-income ratio averaged 36% for new loans in 2023.
- 18% of borrowers were self-employed in 2023 originations.
- Minority borrowers comprised 22% of 2023 purchase loans.
- Average borrower age was 36 for FHA loans in 2023.
- 62% of originations were to repeat buyers in 2023.
- Loan-to-value ratio averaged 80% for conventional loans Q1 2024.
- Women-headed households 15% of new mortgages in 2023.
- Gen Z first-time buyers up 20% to 8% share in 2023.
- Cash-out refinance share was 60% of refis in Q1 2024.
- 45% of borrowers had liquid reserves for 6+ months PITI.
- Rural borrowers 12% of GSE loans in 2023.
- Student debt impacted 20% of millennial applicants in 2024.
- 35% of 2023 loans had DTI over 40%.
- Latino homeownership rate rose to 49.1% in 2023.
Borrower Demographics and Lending Practices Interpretation
Despite the market's insistence on pristine credit scores, the average homebuyer is a resilient, slightly indebted, thirty-something Millennial making a pragmatic, well-planned leap, often on their second try, while a more diverse cast of characters—including thrifty Gen Z and self-employed go-getters—quietly secures their own piece of the pie.
Delinquency and Foreclosure Rates
- Serious delinquency rate for prime mortgages was 0.65% in Q1 2024.
- Overall mortgage delinquency rate fell to 3.62% in Q4 2023.
- FHA delinquency rate stood at 10.88% in March 2024.
- VA delinquency rate was 4.25% in Q1 2024.
- Subprime delinquency peaked at 26.5% in 2009, now at 5.2%.
- Foreclosure starts increased 10% YoY to 37,000 in Q2 2024.
- Serious delinquency (90+ days) for GSE loans was 0.56% in Q1 2024.
- Multifamily delinquency rate hit 6.1% in Q1 2024.
- Prepayment rates for 30-year FRMs were 5.2 CPR in June 2024.
- Foreclosure inventory rate was 0.29% nationwide in Q2 2024.
- Delinquency rate for adjustable-rate mortgages was 1.15% in 2023.
- FHA 90+ day delinquency declined 50 bps to 11.2% in Q1 2024.
- Credit union delinquency rate was 0.85% in Q1 2024.
- New York foreclosure rate was highest at 0.48% in Q2 2024.
- Overall seriously delinquent loans totaled 284,000 in Q1 2024.
- Pre-2009 vintage loans had 0.3% delinquency in 2023.
Delinquency and Foreclosure Rates Interpretation
While the overall mortgage market seems sturdy on the surface, the numbers hint at a familiar tale of two worlds: homeowners with prime credit are gliding along with minimal distress, yet there's a simmering pot of trouble brewing with FHA borrowers and a creeping sense of pressure as foreclosures start to inch upward.
Home Prices and Affordability
- Case-Shiller Home Price Index rose 6.5% YoY in May 2024.
- Median home sales price hit $417,700 in Q2 2024.
- FHFA House Price Index increased 5.2% YoY in Q1 2024.
- Housing affordability index fell to 98.1 in Q1 2024.
- Price-to-income ratio reached 5.6 nationally in 2024.
- Inventory of homes for sale rose 20% YoY to 1.3 million in June 2024.
- Median price per square foot was $239 in Q2 2024.
- Home price growth slowed to 4.8% YoY in Midwest Q2 2024.
- Affordability for median income buyer requires 35% of income.
- Zillow Home Value Index stood at $357,000 in June 2024.
- Months' supply of inventory was 3.7 in June 2024.
- San Francisco MSA price growth was -1.2% YoY in Q1 2024.
- Renter vacancy rate was 6.6% in Q1 2024.
- Price-to-rent ratio averaged 20.5 in major metros 2024.
- New home median price was $417,400 in May 2024.
- Homeowner vacancy rate dropped to 0.8% in Q1 2024.
- First-time buyer affordability index at 65.2 in Q1 2024.
- 40% of renters priced out of homeownership in 2024.
Home Prices and Affordability Interpretation
The relentless climb of home prices has finally started to level off, but don't pop the champagne just yet, because affordability has fallen so sharply that even a rising tide of inventory feels like we're just rearranging deck chairs on a housing Titanic.
Interest Rates and Trends
- 30-year fixed mortgage rates averaged 6.95% in June 2024.
- 15-year fixed rates hit 6.25% average in Q2 2024.
- ARM rates averaged 7.15% for 5/1 ARMs in July 2024.
- Effective mortgage rate spread over Treasury widened to 2.5% in 2024.
- Jumbo 30-year rates were 7.02% in June 2024.
- FHA 30-year rates averaged 7.05% in mid-2024.
- Rates rose 50 basis points from December 2023 lows by June 2024.
- 7/1 ARM rates declined 10 bps to 6.85% in Q2 2024.
- Mortgage rates forecasted to average 6.7% in 2024 by MBA.
- Spread between 30-year FRM and 10-year Treasury was 250 bps in Q1 2024.
- Refinance rates for 30-year fixed were 7.10% in July 2024.
- Historical low: 30-year rate at 2.65% in January 2021.
- Rates increased 200 bps from 2022 lows by mid-2024.
- Conforming loan limits rose to $766,550 for 2024.
- High loan-to-value mortgages saw rates 0.5% higher in 2024.
- Credit score premium for sub-700 FICO was 1.25% in Q1 2024.
Interest Rates and Trends Interpretation
In the grand American tradition of paying extra for everything, the mortgage market now treats the simple act of borrowing for a home like a luxury add-on, charging you a premium for your less-than-stellar credit, a hefty convenience fee for not being a cash buyer, and an 'are you sure?' surcharge just for considering an adjustable-rate loan.
Mortgage Originations and Volumes
- In Q2 2024, total U.S. mortgage originations declined 4% quarter-over-quarter to $769 billion, marking the lowest level since 1996 excluding the pandemic era.
- Purchase mortgage originations in June 2024 fell 7% month-over-month to $1.02 trillion annualized pace.
- Refinance originations dropped 12% in Q1 2024 to $187 billion, the lowest in over two decades.
- FHA loan originations surged 15% year-over-year in 2023 to $512 billion.
- Conventional conforming loan volume reached 62% of total originations in 2023.
- Jumbo mortgage originations grew 8% in H1 2024 to $120 billion.
- VA loan originations hit a record $200 billion in FY 2023.
- Total mortgage debt outstanding increased to $12.44 trillion in Q1 2024.
- Multifamily mortgage originations fell 22% YoY to $120 billion in Q1 2024.
- Ginnie Mae-guaranteed MBS issuance was $450 billion in 2023.
- GSE share of new originations was 52% in Q4 2023.
- Non-QM originations reached $35 billion in 2023, up 20% YoY.
- Reverse mortgage originations totaled 54,000 loans in 2023, valued at $12 billion.
- Credit union mortgage originations grew 5% to $45 billion in 2023.
- Portfolio lender originations accounted for 15% of total volume in 2023.
- Adjustable-rate mortgage (ARM) originations rose to 10% of total in Q2 2024.
- Fixed-rate mortgage originations dominated at 90% of volume in 2023.
- First-time buyer share of originations was 27% in 2023.
- Mortgage applications increased 2.5% week-over-week in early July 2024.
- Total GSE book of business stood at $7.2 trillion as of Q1 2024.
Mortgage Originations and Volumes Interpretation
The market is telling a complex story where everyone seems to be hunkering down with a fixed-rate loan—unless they're a first-time buyer, veteran, or high-net-worth individual navigating the chaos, all while the total pile of debt quietly grows to a record high.
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