The U.S. mortgage market continued its volatile trajectory in the final quarter of 2024, with total lending activity slipping 3% from the previous quarter, according to ATTOM’s latest U.S. Residential Property Mortgage Origination Report. Despite the quarterly dip, mortgage originations climbed 14% year-over-year, reflecting a measured rebound from 2023’s subdued market.
ATTOM’s data shows that lenders issued 1.64 million residential mortgages (covering 1-4 unit properties) in Q4 2024. While this marked an improvement from the same period a year prior, activity remains down nearly 60% from the 2021 peak, when historically low interest rates spurred a home-buying and refinancing boom.
The latest figures highlight a complex lending landscape: purchase and home-equity loan originations fell sharply, while refinancing loans saw a third consecutive quarterly increase. The total dollar volume of residential mortgages reached $568 billion, up 1.4% from Q3 2024 and 26.3% from Q4 2023.
Market Trends: Refinance Activity Bucks Rate Pressures
Mortgage refinancing activity defied expectations, rising 6.4% to 642,000 loans in Q4 despite climbing interest rates. Homeowners seemingly sought to lock in more favorable terms before rates ticked higher. Refinancing volume has now reached its highest level since mid-2022, though it remains well below 2021’s peak.
"The in-boxes of mortgage lenders emptied out a bit during the Fall of 2024 following a couple of strong quarters that had pointed to a possible revival for the industry. Things slowed down as the market remained tight and the cost of borrowing went back, all during the usual annual home-buying lull," said Rob Barber, CEO at ATTOM. "One small surprise emerged with refinancings increasing again despite rising interest rates. That may have happened because rates started the quarter at one of the more attractive points over the past few years, suggesting that homeowners were trying to get their mortgages reset before borrowing costs went back up."
Purchase Loans and HELOCs Retreat
The number of purchase mortgages fell 7.5% quarter-over-quarter to 732,000, reflecting seasonal slowdowns and persistently tight housing supply. Despite the dip, purchase lending remained up 6.4% year-over-year. Meanwhile, home equity lines of credit (HELOCs) declined 11.6% to 267,000 loans, though annual activity still registered an 8.6% gain.
Geographically, lending activity varied across metro markets. Refinancing increased in 73.8% of metro areas analyzed, with notable spikes in Hilton Head, SC (+56.4%), Wilmington, NC (+48.9%), and San Jose, CA (+43.8%). Meanwhile, St. Louis, MO, led quarterly declines in total lending, down 31% from Q3.
FHA and VA Loans Gain Share
Government-backed loans saw an uptick in market share. Federal Housing Administration (FHA) loans accounted for 14.9% of all mortgages, up from 13.6% in Q3. Loans backed by the Department of Veterans Affairs (VA) rose to 6.5% of originations, an increase from 5.8% in the prior quarter.
While mortgage lending remains far from its pandemic-era highs, the annual growth in originations suggests the market may be stabilizing. Barber remains cautiously optimistic: "forces remain in places for lending to remain slow. But the fallback was modest, and the trend should turn back around to some degree over the coming months as the weather warms and home buying heats back up, especially if mortgage rates settle down."
