In the last few months, President Trump requested that “representatives” buy $200 billion of mortgage-backed securities (MBS). Whether gradual, or all at once, new or existing securities, we’ll find out at some point.
Regardless, given the size of the mortgage industry in the primary and secondary markets, it is good for originators to understand some basics about the demand for the product they are manufacturing: those loans are assets and are held as such.
Oftentimes, there is a tremendous amount of speculation in the mortgage industry regarding supply and demand, the foundation of any market.
While mortgage activity remains a sticking point for the economic and housing outlook, recent data indicates that lending standards are easing and supply is increasing in the mortgage market. Many research and economic departments write about residential mortgage debt, which grew tremendously during the pandemic years of 2020 and 2021 when rates sank and home prices skyrocketed.
Since then, housing prices have gradually crept higher, which is far preferable to values shooting up 10%–20% annually. Analysts keep a close eye on institutional investment, and mortgages as a percentage of total assets in comparison to the 40%–45% historical range.
The New York Fed informs us that total household debt increased by $191 billion to hit $18.8 trillion in the fourth quarter of 2025, according to the latest Quarterly Report on Household Debt and Credit. Mortgage balances grew by $98 billion to total $13.17 trillion at the end of December. The pace of mortgage originations continued increasing, with $524 billion newly originated in the fourth quarter. Is there anything holding down stronger growth in the mortgage market?
When we ask, “Who is the primary driver of supply?,” the government-sponsored enterprises (GSEs) are a good place to start.
Although non-agency originations are on the rise as we move into the spring of 2026, the GSEs have made up the majority of growth in the mortgage lending market, and Fannie Mae, Freddie Mac, and (indirectly) Ginnie Mae have surged in mortgage originations compared to private institutions.
Mortgage originations from private entities, like insurance corporations and affiliate institutions, have fallen somewhat, mainly as a function of their inherent risk premiums; it’s hard to compete with the GSE’s daily rates.
Although the price per funded loan is $11,000–$12,000, it’s important to note that the current lending environment remains relatively inexpensive (compared to only a decade ago) and that the percentage of loans approved, but not accepted, has fallen in recent years. This traditionally indicates that borrowers are likely not turning down loans because of any “rate barrier.” Yes, the 6% rates, plus or minus, that we are currently seeing are higher than the 3% rates from six years ago, but refinancing is on the upswing as a result of paying off expensive credit card debt and remodeling capital needs. There are limitations on the risk level associated with mortgage originations for some lending institutions, and it is certainly suppressing mortgage lending growth to a point.
Demand by borrowers for mortgage products could be parsed into 100 categories, as there are substantial differences among loan applications by income, gender, race, and ethnicity. It’s no shock that the highest income bracket has consistently applied for more mortgage loans than any other bracket. This difference peaked when the top income bracket applied for more than four times as many loans as any other bracket.
The second-highest number of loan applications came from the income bracket that was 50%–79% of their metropolitan area’s median. It’s intuitive that the lowest income bracket applied for the least number of mortgage loans.
With shifting socio-economic responsibilities in today’s world, demand for loans by gender has shifted over the past few years.
Historically, applications have been primarily led by males although there was a brief period from 2005-2007 where females led the number of mortgage loan applications. During this time, the percentage of loan application denials by gender was fairly even, leading many to believe that the surge in female loan applications was likely due to increased confidence in loan approval rates for females.
In general, males have applied for more loans and have been denied for fewer. Joint applications for loans have consistently had the lowest denial rates.
In recent years, minorities have driven demand for home mortgages, primarily in the Hispanic and Asian demographics. This is a reversal from the recession period, where these groups saw one of the largest declines in mortgage applications. White/non-native population has consistently applied for the highest number of loans; however, there has been a switch in demand between the Black/African-American population and the Asian population.
The mortgage market recovery has been a slow, and progressive, growth campaign. Popular opinion appears to support an increase in activity over the next several quarters as the market gains momentum, which of course is dependent on many macro factors yet to be determined.
Mortgage supply is a relatively lopsided affair, given the dominance of the GSEs, which have received the highest number of applications over the past couple years, and have originated the largest number of mortgage loans. But non-agency and private money lending is trending higher.
Mortgage demand has seen some shifts by income, gender, race, and ethnicity over the past few years, which could be due to multiple factors, including denial and lending rates offered. Higher income individuals, usually males, and some minority populations, have shown the largest increase in mortgage demand since the credit tightening. As lending standards continue to ease, expect demand to pick up across other categories, and spur further growth in the mortgage market.
