Despite ongoing pressure from elevated interest rates and persistently high home prices, mortgage originations edged up 5.1% year-over-year in the first quarter, according to TransUnion’s Second Quarter Credit Industry Insights Report (CIIR).
The growth was driven by a rebound in refinance activity, with rate-and-term refinances up 44% and cash-out refinances increasing 15% compared with the first quarter of 2024.
The home equity market also experienced its strongest year-over-year growth since 2022, rising 12% in the first quarter. Generation X and Baby Boomers accounted for the majority of home equity originations, highlighting strong demand among established homeowners with significant equity to leverage.
Delinquencies on the Rise
First mortgage delinquencies continued to rise in the second quarter: Loans that are 60 days or more past due increased to a rate of 1.27%, nearing pre-pandemic levels.
FHA loans made up the largest share of these delinquencies, accounting for 35% of the total.
One potential silver lining lies in the performance of the second quarter 2024 vintage of new mortgage originations, which is outperforming the second quarter 2023 cohort – though it still trails vintages from earlier years.
“Amid ongoing uncertainty surrounding tariffs and broader economic policy, the Federal Reserve has maintained a steady interest rate stance in 2025,” says Satyan Merchant, senior vice president, automotive and mortgage business leader at TransUnion, in a statement. “Some forecasts anticipate a potential rate cut in the second half of 2025, which would likely lead to a decline in mortgage rates. If paired with housing inventory returning to pre-pandemic levels, this could stimulate increased mortgage origination activity.”
Photo: Chris Liverani