Home mortgage lending rebounds in the wake of a rough 2023

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After suffering through a steep drop in applications last year, home mortgage lending rebounded in the second quarter of this year, according to a new report. 

There were 1.62 million mortgages secured by residential property in the United States in the second quarter, a 23.2 percent bump from the previous quarter, according to the 2024 U.S. Residential Property Mortgage Origination Report from ATTOM, which tracks real estate data. 

The increase in overall lending resulted from spikes in all categories of residential loans. Purchase-loan activity rose 32.7 percent in Q2, compared with the previous quarter. Refinance loans climbed 10.3 percent and home-equity credit lines increased by 26.5 percent in the second quarter as compared with the first quarter, according to the report. 

However, residential lending activity in the second quarter of this year was still down 1.6 percent from the second quarter of 2023 and down 61.2 percent from the high reached hit in 2021. Still, this year’s second quarter activity marked the first gain in a year and brought the number of residential loans near the level from a year earlier. The report credits the rebound to a strong spring home-buying season and mortgage interest rates began to fall.

Those in the mortgage industry here on Long Island are seeing similar boosts in business. 

“We were probably up about 35 percent in applications in the second quarter,” said Tom Pescuma, a sales manager at Nationwide Mortgage Bankers in Melville. “The beginning of the current quarter is also looking up with an increase in refinancing volume, as well as home-purchasing loans. And we expect continued improvement through the rest of 2024.”  

Nationally, lenders issued nearly $533 billion worth of residential mortgages in the second quarter, up 27.6 percent from the first quarter and a 1.1 percent increase from Q2 2023. The report found that purchase loans remained the most common form of mortgages nationally so far in 2024, comprising almost half of all mortgages, followed by refinance packages and home-equity lending. 

“The mortgage industry got one of its biggest boosts in years during the second quarter, supported by a combination of the usual springtime home-buyer demand coupled with more attractive mortgage rates,” Rob Barber, CEO at ATTOM, said in a company statement. “However, a cautionary note is warranted, as we shouldn’t read too much into one great quarter. A similar trend occurred last spring, with lending dropping off significantly later in the year. But with interest rates settling down and projections for more cuts from the Federal Reserve over the coming months, it wouldn’t be surprising if business increased even more for lenders over the rest of 2024, or at least didn’t drop significantly.” 

Mortgage interest rates in New York have dropped in recent weeks. As of Friday, the average rate for a 30-year fixed loan is 6.2 percent, according to Bankrate.com, that’s significantly lower than last fall, when mortgage rates approached 8 percent.

Still many prospective homebuyers are waiting to see the rates fall further before pulling the trigger on a purchase. 

“Rates have been on a very slow decline, not enough to move the needle for most homebuyers or sellers,” said Vittorio Scafidi, vice president of lending at Westbury-based Jovia Financial Credit Union. “There’s chatter that the federal government may begin to cut interest rates even more, and while no one can predict what’s to happen, there are a lot of cautious people out there that are waiting it out on the sideline to see if the rates will actually drop.”