Finance
Mortgage lending took a huge dip in Q4, but there’s hope for spring housing: report
Housing supply is improving as the spring home buying season nears. (iStock)
Mortgage lending continued to drop considerably in the fourth quarter of 2023, but a recent report indicates that a turnaround is coming.
High home prices, soaring borrowing costs and low housing supply drove lending rates to a two-decade low, with activity down 16.5% from a year earlier and 67.7% from a high point hit in the first quarter of 2021, according to the report by ATTOM. Lenders issued $417.4 billion of residential mortgages in the fourth quarter of 2023, a drop of 14.9% from the third quarter of 2023 and 18.6% from the fourth quarter of 2022.
However, home lending surged nearly 30% in the spring of last year and the rate could increase again this spring if mortgage rates continue to decline as predicted and housing supply improves.
“Multiple powerful forces continued to conspire against the mortgage industry during the fourth quarter, slicing back huge portions of their business,” ATTOM CEO Rob Barber said. “There were signs during the peak buying season of 2022 that things were starting to turn around, with increases in purchase, refinance and HELOC deals. That could happen again this year as we head into this year’s peak period, especially with interest rates coming down recently.
“But the fourth-quarter numbers revealed continued gloomy times for lenders, no matter how you sliced the pie,” Barber continued.
Homebuyers can find better mortgage rates by shopping around and comparing options. Visiting an online marketplace like Credible can help you compare rates, choose your loan term and get preapproved by multiple lenders at once.
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Supply builds as spring nears
Realtor.com economists predict that mortgage rates will slide into the 6% territory in 2024. Fannie Mae expects mortgage rates to decline gradually over the next two years, reaching 6.9% for the 30-year mortgage by 2025. At the same time, First American economists noted that mortgage rates will hover in the 6.5% to 7.5% range.
The dip in rates could help build some much-needed housing supply. Some homeowners are already selling, according to a recent Redfin report. New listings rose 13% from a year earlier nationwide during the four weeks ending March 3, the most significant increase in nearly three years. Home prices have also lost some momentum. Roughly 5.5% of home sellers dropped their asking price, the highest share of any February since at least 2015.
“There have been two major obstacles for homebuyers over the last year: low inventory and high housing costs,” Redfin Economic Research Lead Chen Zhao said. “Now, the first barrier is starting to come down as more supply comes on the market. Housing costs are still high, but they’re likely to come down a bit as mortgage rates gradually decline through the year and price growth loses some steam.
“Buyers who can afford today’s mortgage rates may have better luck finding a home now than they have in the past several months, and they also may be less likely to face competition because inventory is improving,” Zhao continued.
If you’re looking to become a homeowner, you could still find the best mortgage rates by shopping around. An online marketplace like Credible can help you compare your options.
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Creative avenues for home affordability
First-time homebuyers are finding ways to forge their path to homeownership. For example, many young Americans planning to buy a home next year are relying on side income to generate cash, according to a Redfin survey.
Forty-one percent of Gen Zers and 36% of Millennials said they are working second jobs to save for their down payment and about one-quarter plan to use a cash gift from family. Some have even opted to house hack to help pay off their mortgage and other bills, according to a recent Realtor.com report. This is when a buyer purchases a home intending to rent out rooms for the long or short term.
The co-buying trend is another way young buyers share homeownership costs, according to the report. Co-buying helps friends and family pool resources to come up with down payments and closing costs. It is also a way to share costly monthly mortgage payments, utility bills and maintenance and repair costs.
If you’re considering becoming a homeowner, it could help to shop around to find the best mortgage rate. Visit Credible to compare options from different lenders and choose the one with the best rate for you.
Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.
JPMorgan Chase CEO Jamie Dimon said Wednesday the looming tariffs that President Donald Trump is expected to slap on U.S. trading partners could be viewed positively.
Despite fears that the duties could spark a global trade war and reignite inflation domestically, the head of the largest U.S. bank by assets said they could protect American interests and bring trading partners back to the table for better deals for the country, if used correctly.
“If it’s a little inflationary, but it’s good for national security, so be it. I mean, get over it,” Dimon told CNBC’s Andrew Ross Sorkin during an interview at the World Economic Forum in Davos. “National security trumps a little bit more inflation.”
Since taking office Monday, Trump has been saber-rattling on tariffs, threatening Monday to impose levies on Mexico and Canada, then expanding the scope Tuesday to China and the European Union. The president told reporters that the EU is treating the U.S. “very, very badly” due to its large annual trade surplus. The U.S. last year ran a $214 billion deficit with the EU through November 2024.
Among the considerations are a 10% tariff on China and 25% on Canada and Mexico as the U.S. looks forward to a review on the tri-party agreement Trump negotiated during his first term. The U.S.-Mexico-Canada Trade Agreement is up for review in July 2026.
Dimon did not get into the details of Trump’s plans, but said it depends on how the duties are implemented. Trump has indicated the tariffs could take effect Feb. 1.
“I look at tariffs, they’re an economic tool, That’s it,” Dimon said. “They’re an economic weapon, depending on how you use it, why you use it, stuff like that. Tariffs are inflationary and not inflationary.”
Trump leveled broad-based tariffs during his first term, during which inflation ran below 2.5% each year. Despite the looming tariff threat, the U.S. dollar has drifted lower this week.
“Tariffs can change the dollar, but the most important thing is growth,” Dimon said.
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