The Consumer Financial Protection Bureau (CFPB) — the same consumer-oriented protective government agency that Elon Musk and Vivek Ramaswamy want to eliminate, as Business Insider and others have reported — came out with its annual report on the mortgage market and trends.
The findings likely will not surprise anyone who tried to buy a house last year or this. The number of mortgage applications dropped by 4.3 million, or 30.3% between 2022 and 2023.
Originations — the original mortgage loans — fell by 2.7 million, or 32.2%. And 2023 origination volume was only 37.9% of the 2021 peak. Two-thirds of the purchase volume has been lost. But this can be a little deceptive.
There are two types of originations: refinancing and home purchases. Refinancing has for decades been a popular activity, whether to take advantage of lower mortgage rates or to pull out some capital in the process. Such originations, though, fell by more than half from 2022 to 2023. Home purchase originations fell by less than a third.
Discount or mortgage points are sums borrowers pay to get a lower mortgage interest rate, with a point usually representing a quarter of a percent from the rate for 1% of the loan amount. Buying points became more popular, with a 12.7% increase between 2022 and 2023. Not surprising given how mortgage rates climbed. Median discount points for a home purchase were $3,000 (26.6% increase) and $3,902 (35.6% increase) for refinance loans in 2023.
Combining origination fees and points, median costs to process the loan, not counting the downpayment, grew from $5,954 in 2022 to $6,684 in 2023, and increase of 12.2%. Median refinancing mortgage costs took a 47.2% jump from $4,979 in 2022 and $7,329 in 2023. Both Hispanic white borrowers and black borrowers saw their median total loan costs rise respectively at 15.1% and 12%. Non-Hispanic white and Asian borrowers saw costs increase respectively by 10.5% and 8.0%.
More specifically, median white Hispanic borrowers paid $9,080 in total loan costs, the highest median of all racial or ethnic groups. According to the CFPB, this has been true in previous years. Black borrowers paid $8,464. Asian borrowers paid $6,625, with the lowest median cost of $5,911 going to non-Hispanic white borrowers.
For a more visual sense of how interest rates and monthly mortgage payments have changed over time, below is a graph from the CFPB.
Mortgage rates and monthly payments have jumped fast and high since the lows of January 2021. What that graph doesn’t show is the rise in the median sales price for houses, as the next graph makes clear.
Or you can look at housing prices indexed by 1980’s prices in this graph:
Mortgage rates have been significantly higher in the past. That can be inconvenient. But what really drives homeownership into the realm of a fantasy novel for most people is the price. In the 1980s, many people managed to swing a mortgage even with double-digit rates. Now? Too many don’t have the downpayment or the income for the monthly costs.