TransUnion has released an optimistic report forecasting that mortgage originations will increase to approximately 5.7 million in 2025, up from approximately 4.6 million in 2024, with most of those being purchase originations (~3.8 million).
However, lenders’ continued caution in their underwriting strategies will likely temper the overall rate of growth, the credit bureau says in its Q4 2024 Quarterly Credit Industry Insights Report (CIIR), which also analyzes auto loan and credit card data.
“The Federal Reserve has signaled that it will not rush into interest rate cuts, potentially keeping rates at a level that could give consumers pause,” says Jason Laky, executive vice president and head of financial services at TransUnion, in the report. “However, we still believe that many consumer credit products will have higher originations in 2025. This will range from modest growth in auto and unsecured personal loans to more significant increases in mortgage.”
Mortgage originations grew 7% year-over-year in the third quarter of 2024, the most recent quarter for which data are available, the firm says. It was the third consecutive quarter in which mortgage originations were either flat or showed growth.
Purchase originations continued to drive this growth, accounting for 82% of all originations for the quarter, TransUnion says. This compares to a 68% average third-quarter purchase share in the five years pre-pandemic.
Rate and term refinance originations also played a role in this growth, seeing significant year-over-year growth of 174% in the third quarter. This doubled the counts from the prior quarter as homeowners who recently opened a mortgage took advantage of the lowest rates in two years.
“In the fourth quarter, we saw several signals inching towards a return to more typical patterns within the consumer credit market,” says Michele Raneri, vice president and head of research at TransUnion. “Originations ticked up across mortgage and auto and saw more significant growth in unsecured personal loans. In contrast, delinquencies presented more of a mixed bag, seeing increases in auto and mortgage, while at the same time decreasing for unsecured personal loans and credit cards. We will be looking for additional signs of improved performance in these markets moving forward.”
Although TransUnion is forecasting that mortgage origination volume will increase in the months to come, it also forecasting that mortgage loan performance will continue deteriorate.
“Despite recent quarters of growth, origination volumes continue to be depressed by historical standards,” Raneri says. “Recent Federal Reserve indications that interest rate reductions may occur more slowly may result in decelerated growth in 2025. Year-over-year increases in delinquency continue to be worth monitoring closely. Yet, even despite a relatively steady series of year-over-year increases in recent quarters, the rate remains extremely low relative to historical standards.”
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