ICE Mortgage Monitor: 2023 Saw Three-Decade Low in Originations

(Image courtesy of ICE; source: ICE, eMBS)

Intercontinental Exchange Inc., Atlanta, released its Mortgage Monitor report for March, featuring some full-year 2023 insights. Among those, the report recorded only 4.3 million mortgages as originated in 2023, the lowest since ICE began tracking the data 30 years ago.

However, first-time homebuyers made up a larger share of agency purchase security issuance.

“Since 1995, only two quarters have seen fewer than 1 million first lien mortgages originated,” Andy Walden, ICE Vice President of Enterprise Research Strategy. “The first was Q1 2023, and Q4 the second. Looking back, last year’s market was dominated by purchase lending, with loans to buy homes making up 82% of a historically low number of originations. While it remains a tough market for prospective purchasers, our eMBS agency securities database revealed that first-time homebuyers actually made up 55% of all agency purchase mortgages last year. That’s the highest share in the 10 years we’ve been tracking the metric.”

“In fact, FTHB purchase loans accounted for an exceptionally high share of all issuance activity last year. They made up 39% of all GSE securitizations in 2023–12 percentage points higher than any other vintage in the past decade. The market in which these folks purchased their first home was one of record house prices, ballooning down payments, rising rates and elevated DTIs,” Walden continued. “Given record exposure to first-time homebuyer loans, it’ll be worth watching the performance of this cohort very closely moving forward, particularly for those invested in 2023 agency MBS.”

The report also highlighted a jump in refinance activity–by 19% in January. Rate/term refinances saw an 80% month-over-month jump and made up 24% of refinance activity.

Walden predicted a potential mini surge of refi activity around the 2023 vintage throughout the year.

That trend may provide some challenges though–according to the report, servicers struggled to retain refinancing borrowers. They only retained about 20%, or the lowest mark in 17 years.