After a precipitous 35% plunge in 2023, the U.S. mortgage industry is navigating a new landscape defined by higher rates, shifting market shares, and a renewed focus on purchase loans, as revealed by a deep dive into last year’s pivotal data.
Key Takeaways
- In 2023, total US residential mortgage originations were $1.68 trillion, a 35% decline from $2.59 trillion in 2022.
- Purchase mortgage originations in Q4 2023 totaled $392 billion, up 7% from Q3 2023.
- Refinance originations dropped to $140 billion in Q4 2023, representing only 26% of total originations.
- The average mortgage origination fee was 1.02% of loan amount in Q4 2023.
- 30-year fixed mortgage rate averaged 6.81% in 2023, up from 5.34% in 2022.
- 15-year fixed rate averaged 6.18% in 2023.
- Serious delinquency rate for all mortgages was 0.87% in Q4 2023.
- FHA delinquency rate stood at 10.38% in Q4 2023.
- VA delinquency rate was 4.28% as of Q4 2023.
- National median home price rose 5.3% YoY to $396,800 in Q4 2023.
- Case-Shiller National Home Price Index increased 5.1% YoY in Dec 2023.
- Affordability index fell to 98.1 in Q4 2023, lowest since 2007.
- United Wholesale Mortgage held 8.5% origination market share in 2023.
- Rocket Mortgage captured 6.2% of total originations in 2023.
- LoanDepot originated $85 billion, 5.1% share in 2023.
The US mortgage market sharply contracted in 2023 amid rising interest rates and low affordability.
Delinquency and Default
- Serious delinquency rate for all mortgages was 0.87% in Q4 2023.
- FHA delinquency rate stood at 10.38% in Q4 2023.
- VA delinquency rate was 4.28% as of Q4 2023.
- Conventional delinquency rate dropped to 2.45% in Q4 2023.
- Foreclosure starts increased 10% YoY to 0.20% in Q4 2023.
- Serious delinquency (90+ days) for FHA was 4.12% in Q4 2023.
- Overall foreclosure inventory rate was 0.30% in Q1 2024.
- Subprime delinquency rate remained low at 3.5% in 2023.
- Prepayment rates fell to 5.2% CPR in Q4 2023.
- Bankruptcy filings impacting mortgages rose 15% in 2023.
- Forbearance exits reached 99% resolution rate by end-2023.
- New foreclosure starts were 44,000 in Q4 2023.
- Delinquency rate for prime jumbo loans was 0.25% in 2023.
- FHA seriously delinquent loans totaled 380,000 in Q4 2023.
- Overall mortgage default rate was 1.2% in 2023.
- Prepayment speed index dropped 20% YoY in 2023.
- Loss severity on foreclosed loans averaged 28% in 2023.
- GSE delinquency rate was 0.92% in Q4 2023.
- Non-agency RMBS delinquency was 5.8% in 2023.
- Modification volume for delinquent loans was 120,000 in 2023.
- Early delinquency (30-59 days) rate was 2.8% in Q4 2023.
- Foreclosure sales totaled 25,000 properties in Q4 2023.
- Delinquency transition rates fell to historic lows in 2023.
- Manufactured home delinquency was 7.5% in 2023.
- Investor loan delinquency held at 1.1% in Q4 2023.
- Cure rate for 60+ day delinquents was 45% in 2023.
Delinquency and Default Interpretation
The mortgage market appears remarkably healthy overall, with its stubborn 0.87% serious delinquency rate proving resilient, yet it's nursing a very specific and serious headache in the FHA corner where a 10.38% delinquency rate suggests a segment of borrowers is struggling profoundly despite the broader stability.
Home Prices and Affordability
- National median home price rose 5.3% YoY to $396,800 in Q4 2023.
- Case-Shiller National Home Price Index increased 5.1% YoY in Dec 2023.
- Affordability index fell to 98.1 in Q4 2023, lowest since 2007.
- Housing affordability dropped 16% YoY in Q1 2024.
- Median sales price for existing homes was $382,200 in 2023.
- New home median price reached $417,700 in 2023.
- Home price-to-income ratio hit 5.5x in 2023.
- Monthly mortgage payment for median home rose 10% to $2,118 in 2023.
- Inventory of homes for sale increased 15% to 1.07 million in Q1 2024.
- Months' supply of homes rose to 3.6 months in Q1 2024.
- Price per square foot averaged $205 in Q4 2023.
- First-time buyer affordability index was 65.2 in 2023.
- Share of homes sold above asking price fell to 29% in 2023.
- Pending Home Sales Index dropped 4.9% YoY in Jan 2024.
- Repeat buyer median home price was $425,000 in 2023.
- Price growth slowed to 3.9% YoY in Midwest Q4 2023.
- Western region home prices up 6.2% YoY to $550,000 median.
- Renter median income needed for homeownership rose to $102,000 in 2023.
- 30% of income threshold for affordability hit by 75% of counties in 2023.
- Home price appreciation forecast for 2024 is 3.5%.
- Median listing price was $425,000 in March 2024.
- Price cuts on listings reached 41% in early 2024.
- Luxury home prices grew 7.1% YoY in Q4 2023.
- Starter home median price surged 5.8% to $350,000 in 2023.
- Affordability-adjusted price index fell 2% in 2023.
Home Prices and Affordability Interpretation
Despite the welcome increase in inventory and price cuts suggesting a cooling market, the relentless rise in home prices has decisively outpaced incomes, pushing affordability to its most crushing level since the eve of the last housing crisis.
Interest Rates
- The average mortgage origination fee was 1.02% of loan amount in Q4 2023.
- 30-year fixed mortgage rate averaged 6.81% in 2023, up from 5.34% in 2022.
- 15-year fixed rate averaged 6.18% in 2023.
- 5/1 ARM rates hit 6.45% average in Q4 2023.
- Mortgage rates peaked at 7.79% for 30-year fixed on Oct 23, 2023.
- Effective mortgage rate spread over 10-year Treasury was 2.85% in 2023.
- Discount points averaged 0.67 per loan in Q4 2023.
- Jumbo 30-year rates averaged 6.95% in 2023.
- FHA 30-year rates were 6.85% average in 2023.
- VA 30-year rates averaged 6.45% in 2023.
- Conforming loan limits rose to $766,550 in 2024 from $726,200 in 2023.
- ARM share of applications reached 12% in January 2024.
- 7/1 ARM rates averaged 6.60% in Q1 2024.
- Mortgage rate lock volume increased 25% in Q4 2023 as rates stabilized.
- Par rates for 30-year fixed fell to 6.75% by March 2024.
- Credit spread for MBS tightened to 140 bps in early 2024.
- Average lender yield on 30-year loans was 6.92% in Q4 2023.
- Rate buydown usage hit 40% of loans in Q4 2023.
- 30-year FRM dipped to 6.69% in week ending March 28, 2024.
- Mortgage APR averaged 7.02% for 30-year in 2023.
- High-balance loan rates were 0.25% higher than conforming in 2023.
- Non-QM rates averaged 8.5% in 2023.
- Reverse mortgage rates averaged 6.75% for HECM in 2023.
- Overall mortgage rate forecast for 2024 end is 6.2%.
- 10-year Treasury yield averaged 4.0% in 2023, influencing rates.
Interest Rates Interpretation
The industry held its breath as rates soared above 7%, cleverly kept lenders profitable through generous fees and rampant rate buydowns, and now cautiously bets on a gentle descent back toward sanity by year's end.
Lender Market Share
- United Wholesale Mortgage held 8.5% origination market share in 2023.
- Rocket Mortgage captured 6.2% of total originations in 2023.
- LoanDepot originated $85 billion, 5.1% share in 2023.
- Chase Bank mortgage volume was $62 billion, 3.7% share.
- PennyMac Corp led IMBs with $140 billion in 2023.
- Wells Fargo originated $54 billion, down 20% YoY.
- Bank of America share was 2.8% at $47 billion volume.
- Fairway Independent had 1.9% share with $32 billion.
- Guild Mortgage volume reached $28 billion, 1.7% share.
- Navy Federal Credit Union grew to $25 billion, 1.5% share.
- Mr. Cooper serviced $11.2 trillion UPB end-2023.
- Ocwen servicing portfolio was $87 billion UPB.
- PHH Mortgage (Coventry) had 1.2% origination share.
- Top 10 lenders controlled 45% of origination market in 2023.
- Retail channel share fell to 22% in 2023.
- Wholesale lenders dominated with 55% share.
- Credit unions captured 7% origination share in 2023.
- Non-bank lenders originated 75% of volume in 2023.
- Flagstar Bank volume was $40 billion, 2.4% share.
- Newrez LLC originated $38 billion.
- Caliber Home Loans had $35 billion volume.
- Top servicer SLM held 10% MSR market share end-2023.
Lender Market Share Interpretation
The mortgage market in 2023 was a story of wholesale non-bank dominance, where a few giants like United Wholesale and Rocket jostled for the top spot while traditional banks watched their retail influence steadily erode.
Originations and Volume
- In 2023, total US residential mortgage originations were $1.68 trillion, a 35% decline from $2.59 trillion in 2022.
- Purchase mortgage originations in Q4 2023 totaled $392 billion, up 7% from Q3 2023.
- Refinance originations dropped to $140 billion in Q4 2023, representing only 26% of total originations.
- FHA loan originations in 2023 reached 890,000 units, accounting for 12% of all originations.
- VA mortgage originations hit 413,000 in FY2023, with a total volume of $142 billion.
- Conventional conforming originations dominated with 78% market share in 2023 at $1.31 trillion.
- Jumbo mortgage originations fell 42% YoY in 2023 to $285 billion.
- Total mortgage applications surged 49% in January 2024 compared to December 2023.
- In 2022, mortgage originations peaked at $4.1 trillion, the highest since 2005.
- Q1 2024 originations volume was $452 billion, with purchase loans at 81% share.
- Multifamily mortgage originations increased 12% in 2023 to $335 billion.
- Ginnie Mae-guaranteed originations were $678 billion in 2023, down 28% YoY.
- Non-QM originations grew 15% in 2023 to $45 billion.
- Reverse mortgage originations reached 64,000 in 2023, up 5% YoY.
- USDA loan originations totaled 38,000 in FY2023, with $6.5 billion volume.
- 2023 saw 1.65 million single-family mortgage originations for purchases.
- Adjustable-rate mortgage (ARM) originations rose to 10% of total in Q4 2023.
- Fixed-rate originations comprised 90% of 2023 volume at $1.51 trillion.
- Cash-out refinance originations were $98 billion in 2023, down 60% YoY.
- Rate-term refinance originations plummeted to $42 billion in 2023.
- First-time buyer originations accounted for 28% of purchases in 2023.
- Investor purchase originations rose to 19% of total purchases in 2023.
- Total outstanding mortgage debt reached $12.25 trillion in Q4 2023.
- New mortgage debt issuance was $1.72 trillion in 2023.
- GSE (Fannie/Freddie) share of originations was 52% in 2023.
- Portfolio lender originations held 15% market share in 2023.
- Credit union mortgage originations grew 8% to $112 billion in 2023.
- Independent mortgage bank originations volume fell 40% in 2023.
- Wholesale channel originations were 62% of total in Q4 2023.
- Correspondent channel captured 38% of originations in 2023.
Originations and Volume Interpretation
While the mortgage industry's overall volume took a sobering 35% dive to $1.68 trillion in 2023, the frantic January 2024 application surge and the steady rise of first-time and investor buyers suggest the market isn't drowning, just cautiously learning to swim in a higher-rate environment.
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