We recently released our Q4 2024 Homebuyer Intelligence Report, a quarterly summary of insights into borrower behavior during the home-buying process based on data collected by the LenderLogix suite of tools. Here are some of the critical takeaways—and what they mean for lenders as 2025 takes the stage.
1. Rate Environment Increases Borrower’s Price Sensitivity
The affordability crisis has been a hot topic not only in the industry but across the country. Stock is low, and homes have significantly appreciated in value, leaving young and first-time homebuyers floundering to break into the market amidst high interest rates and skyrocketing closing costs. Even borrowers with more experience who have done everything right may find the current market a struggle to navigate, especially with homeowners insurance premiums also on the rise.
According to the report, the average sales price decreased from $446,390 to $376,436 from Q3 to Q4 of 2024. Additionally, the average down payment size shows a marginal increase from 13% in Q3 to 14.3%. Combined, these facts suggest borrowers are making moves like purchasing a less expensive home or maximizing their down payment to minimize their monthly mortgage payment.
2. Increased FHA opportunities
If waiting for the market to shift towards greater affordability isn’t your style, alternatives exist. The Federal Housing Administration (FHA), a part of the Department of Housing and Urban Development (HUD), insures loans to empower lenders to offer borrowers lower closing costs and down payments with fewer credit restrictions. While conventional loans remain the most popular loan type for pre-approved borrowers, FHA pre-approvals increased somewhat from 17.9% in Q3 to 19.1% in Q4 2024.
Lenders trying to get ahead in 2025 need to ensure their loan officers and borrowers are educated on the financial relief programs available to them, whether through FHA loans or down payment assistance programs. Taking a proactive approach and seeking ways to help your borrowers reach their financial goals will help keep your pipeline moving while affordability is of critical importance.
3. Steady Borrower Pipeline
The current market, facing high interest rates, high sales prices and low inventory, has led to an increased emphasis on providing competitive borrower experiences. From Q3 to Q4, the average number of days between pre-approval and loan submission held steady at 91 days. For lenders trying to gain a competitive edge by enhancing borrower experiences, providing timely support is vital. Finding mortgage-ready borrowers is only the first step; those borrowers must be retained through the mortgage process and with any luck, become repeat customers and lifelong referral sources.
Market trends make it clear that lenders need to take a proactive approach to navigating current affordability challenges while evaluating the potential for market shifts. Our suite of LenderLogix solutions is here to help lenders do just that, from easily automating pre-approval processes and reducing friction during borrowers’ search for a home using QuickQual™ to compliantly accepting payments and closing fees instantly and securely through Fee Chaser™.
For more insights and intelligence, read the full report here.
