The drop was caused in part by high interest rates, the regulator said in a Friday press release outlining findings from its annual report on mortgage market activity and trends.
“Overall, 2023 was a year marked by a significant downturn of mortgage lending activities across all major segments,” the report said.
Compared to the previous year, the number of loan applications decreased by 30%, the number of originations fell by 32% and refinancing of single-family homes dropped by 64%, according to the release.
“Most of the refinance originations left in the market were a small number of cash-out refinance loans,” the release said.
The average monthly mortgage payment rose from $2,045 in December 2022 to $2,295 in December 2023, per the release. These figures are based on a conventional conforming 30-year fixed-rate mortgage and exclude taxes and insurance.
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“The increase in monthly payment was driven almost entirely by the rise in mortgage interest rates,” the release said.
The average debt-to-income ratio of home purchase applications was little changed during the year, according to the release. The CFPB attributed that to lenders shifting their focus to higher-income borrowers.
Fifty-six percent of single-family loan originations paid discount points in 2023 — a share that was nearly 13% higher than in 2022, per the release. The median discount points paid was about $3,000 for home purchase loans and $3,900 for refinance loans.
“Non-depository institutions, such as independent mortgage companies, originated significantly more loans than banks and credit unions,” the release said.
Independent mortgage companies originated about 62% of closed-end home purchase loans and 64% of refinance loans in 2023, according to the report. Both of those shares were about 62% a year earlier.
The Federal Reserve Bank of New York reported in November that rejection rates for mortgage applications soared more than 8 percentage points year over year in 2024, reaching nearly 21%.
The National Association of Realtors said in November that the age of a typical home buyer hit an all-time high of 56 as many younger buyers found themselves priced out of the housing market.
