Mortgage lenders see signs of 2025 originations growth

Mortgage lenders managed to increase origination volumes earlier in 2025 in a still-sluggish housing market at the same time home equity loans grew at their fastest pace in three years, according to Transunion. 

Originations climbed up 5.1% on an annual basis in this year's first quarter to just approximately 980,000 loans, according to the latest credit industry insights report from Transunion. Numbers rose from 900,000 over the same three months both in 2024 and 2023 but were well off the 2.2 million reported in first quarter 2022 at the end of the most recent refinance boom. 

While higher interest rates have put a damper on the lending environment over the last three years, the short-term outlook holds promise if the central bank and home sellers do their part to spur borrower interest, according to Satyan Merchant, senior vice president, automotive and mortgage business leader at TransUnion.

"Some forecasts anticipate a potential rate cut in the second half of 2025, which would likely lead to a decline in mortgage rates. If paired with housing inventory returning to pre-pandemic levels, this could stimulate increased mortgage origination activity," he said in a press release. 

Over the past several months, brief dips in mortgage rates have led to multiple boomlets of mortgage interest when borrowers rushed in to take advantage of the temporary reprieve, particularly for refinances.

Lenders got another inkling of refi demand in early August as originations jumped 23% last week in response to tumbling rates, according to the Mortgage Bankers Association. 

Purchase transactions, though, still made up over four-fifths, or 81.3% of first-quarter originations, with refinances responsible for only 18.7%, Transunion found 

Among refinances, rate-and-term transactions surged 43% year over year to finish at 63,200 loans. Numbers grew for the sixth consecutive quarter. 

First-quarter cash-out refinances also jumped approximately 19% from a year earlier to 120,200 from 100,900. 

Borrowers take a look at home equity

With home values at record levels and interest rates still limiting refi demand, more homeowners looked at tapping into their accrued equity during the quarter. Amounts currently available to homeowners currently run between $17.5 trillion and as high as Transunion's $21.5 trillion estimate.   

Over the first quarter, originations of home equity lines of credit, HEloans as well as cash-out refinances, increased 12% year over year to 648,800 from 572,700, by Transunion's calculations. The quarter saw the largest rate of growth since 2022, according to the report. 

HELOCs accounted for a 40.4% share of originations, loans for 41% with cash-outs garnering the remaining 18.5%.

"Generation X and baby boomers accounted for the majority of home equity originations, highlighting strong demand among established homeowners with significant equity to leverage," the report said.

Meanwhile, the balance of home equity originations surged 26% year over year to $66.9 billion from $53.1 billion, with 58.3% of the total coming from cash-out refis.