U.S. mortgage industry - statistics & facts
The U.S. mortgage market has experienced significant fluctuations due to refinancing activity skyrocketing during the COVID-19 pandemic and dropping dramatically in 2022 and 2023. The decline in refinancing lending can be largely attributed to the Federal Reserve's aggressive interest rate hikes to combat inflation. The average 30-year fixed mortgage rate soared from under three percent in 2020 to over seven percent in 2023, which made the renegotiation of existing loans less attractive for homeowners. This surge in borrowing costs has dampened refinancing, as homebuyers adopted a “wait-and-see” approach. Furthermore, it has impacted homebuyer sentiment, with the majority of Americans considering the time not right to purchase a home.
Despite the recent downturn, the mortgage market has shown resilience over time. In 2025, conditions are expected to improve as the gradual decline in mortgage rates triggers an increase in refinancing and housing transactions.
Business priorities in the mortgage industry
As the industry adapts to the changing landscape, talent management, leadership, and cost-cutting emerge as the most important business priorities for 2024. According to a survey conducted in May of that year, one in three industry experts identified talent and leadership as a crucial focus, followed closely by cost-cutting at 31 percent. The emphasis on talent management and reducing expenses comes amid a housing market that has become increasingly unaffordable. In 2023, the Housing Affordability Index hit the lowest level on record, indicating that it has never been more difficult for Americans earning the national median income to afford the median-priced home.Current challenges
The importance of affordability is further underscored by the biggest risks facing the mortgage industry. In 2024, two in three experts ranked the insufficient housing supply as the prime concern faced by the industry. Chronic undersupply is believed to be among the major causes for the steady increase in house prices since 2012. These sustained price hikes, coupled with rising mortgage rates – the second biggest risk for the industry - have created a challenging environment for potential homebuyers and undermined mortgage lending.Despite the recent downturn, the mortgage market has shown resilience over time. In 2025, conditions are expected to improve as the gradual decline in mortgage rates triggers an increase in refinancing and housing transactions.
