Mortgage Originations Slip in Q3 as Homebuyers Pull Back, But Refis and HELOCs Gain Ground
U.S. mortgage activity slowed slightly in the third quarter of 2025, but the overall picture remains one of quiet stability rather than a sharp downturn. ATTOM’s latest mortgage origination report shows the market softening at the surface while underlying segments—especially refinancing and home-equity borrowing—continue to grow. The result is a mixed but steady environment as the industry transitions into the final quarter of the year.
A total of 1.77 million mortgages were originated in Q3, down 1.6% from the previous quarter but still nearly 2% higher than last year. ATTOM CEO Rob Barber described the period as cautious but stable, noting that homeowners are increasingly willing to refinance or tap equity even as aspiring buyers continue to run into affordability barriers. Loan volume reached $600.4 billion, just slightly below Q2’s level but comfortably above 2024 totals.
The biggest drag on activity came from purchase loans, which fell almost 5% from Q2 and more than 6% year over year. That reflects the reality buyers are facing: high prices, elevated mortgage rates, and limited inventory in many regions. Major metros like Austin, Atlanta, and Dallas saw some of the steepest drops in purchase demand, underscoring how stretched buyers are in fast-growing Sunbelt markets. But not all markets slowed. Cities such as Buffalo, New York, Cleveland, Rochester, and Philadelphia posted gains, helped by more stable pricing and slightly improved inventory.
Refinancing continued to move in the opposite direction. Even with modest rate cuts, refi activity increased for the fourth straight quarter. Homeowners are taking advantage of any improvement in rates to secure better terms, pushing refinance originations up 12% from last year. Cities like Las Vegas, New Orleans, Phoenix, and Honolulu posted some of the strongest gains.
HELOC borrowing remains one of the brightest spots in mortgage lending. Rising home values and tighter budgets have pushed more owners to tap home equity for renovations, debt consolidation, or major expenses. HELOC activity rose nearly 3% from Q2 and more than 4.5% annually, with strong growth in metros like Portland, Virginia Beach, Richmond, Fresno, and Birmingham. These loans now make up nearly one in five mortgage originations—one of the highest shares in years.
Government-backed and construction lending edged lower, reflecting softer homebuying and a cooling pace of new-home building. FHA and VA loans both ticked down, and construction loans declined to just over 1% of all originations.
Taken together, the Q3 data shows a market that is stable but far from surging. Buyers remain constrained by affordability, keeping purchase activity muted, while homeowners continue to drive lending through refinances and home-equity borrowing. As Q4 begins, the mortgage landscape looks steady and balanced, but momentum will depend on whether affordability improves and rates continue to ease heading into 2026.
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