CFPB report finds that mortgage originations dropped sharply in 2023

The Consumer Financial Protection Bureau’s (CFPB) annual report on trends in the residential mortgage lending market showed a significant decline in mortgage lending activities in 2023.

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The report said that loan applications and originations dropped by about a third from 2022, with the decline even more prominent in refinancing activity than home purchase. Specifically, single-family refinance originations were down by nearly two-thirds from 2022.

In addition, median total loan costs jumped significantly in 2023 as a higher percentage of borrowers reported having paid discount points than any other year since tracking of the data began.

Among the key findings, the CFPB found:

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• The number of loan applications decreased by 30 percent and originations decreased by 32 percent from 2022. Further, the number of refinancings of single-family homes fell by 64 percent.
• The average monthly payment excluding taxes and insurance for borrowers taking out a conventional 30-year fixed-rate mortgage rose from $2,045 in December 2022 to $2,295 in December 2023. The increase in monthly payment was driven almost entirely by the rise in mortgage interest rates.
• More than 56 percent of single-family loan originations paid some discount points in 2023, nearly a 13 percent increase from 2022. The median discount points paid for home purchase loans was about $3,000 and for refinance loans was about $3,900.
• The median total loan costs for home purchase loans were about $6,700 in 2023, while for refinance loans the loan cost was over $7,300. Notably, Hispanic and Black borrowers experienced faster increases in the median total loan costs for home purchase loans compared to Asian and non-Hispanic white borrowers.
• Non-depository institutions, such as independent mortgage companies, originated significantly more loans than banks and credit unions. In 2023, independent mortgage companies originated nearly 62 percent of all closed-end home purchase loans and over 64 percent of refinance loans.

The full report, called the 2023 Mortgage Market Activity and Trends, can be found on the CFPB web site.