Driven by cash-out refis, mortgage originations reach highest level since 2022

Mortgage originations hit their highest quarterly level since 2022, with both purchase and cash-out refinance activity approaching three-year highs, according to ICE Mortgage Technology’s Mortgage Monitor report for August.

The report, released Monday, also revealed that total and tappable home equity reached record levels.

“Homeowners are actively drawing on record equity with cash-out refinance loans, signaling increased demand despite elevated rates,” said Andy Walden, head of mortgage and housing market research at ICE.

“Meanwhile, a substantial cohort of people who purchased homes over the last three years are watching on the sidelines for rates to drop so they can refinance into a lower monthly payment.”

In the second quarter, cash-out transactions accounted for 59% of all refinances. These borrowers saw their monthly payments rise by about $590 on average. Their credit scores averaged 719 and their loan balances averaged $188,000 — both figures that are lower than for borrowers who pursued rate-and-term refinances.

ICE data showed that 70% of cash-out borrowers accepted higher interest rates — with an average increase of 1.45 percentage points — in exchange for withdrawing an average of $94,000 in equity.

Slowing home equity growth

Tappable equity — the amount that a homeowner can access while retaining 20% equity — rose to a record $11.6 trillion, part of the $17.8 trillion in national home equity entering the third quarter.

Roughly 48 million mortgage holders had tappable equity, equating to $213,000 per borrower.

But the pace of equity growth slowed to its lowest in two years. ICE largely attributed the slowdown to falling home prices in parts of the Sun Belt and West regions.

Tappable equity per borrower in Austin, for example, dropped 38% from its peak, while Deltona, Florida, saw a 37% decline. Nearly one-quarter of U.S. markets recorded at least a 5% decline in tappable equity. And about 1% of mortgage holders — or roughly 564,000 borrowers — are now underwater, owing more than their homes are worth.

Refinance retention takes a hit

Cash-out borrowers presented challenges for mortgage servicers, with retention for these loans falling to a more than four-year low in the second quarter.

Overall refinance retention dropped to 23%, the lowest rate since mid-2024. Borrowers who purchased in 2024 were more likely to stay with their lender — with a retention rate of 43%.

“As homeowners increasingly look to access their equity, lenders and servicers need tools that help reach them first,” said Tim Bowler, president of ICE Mortgage Technology.

“By embedding refinance capabilities within the servicing experience — as we did with the newest integration between our MSP servicing and Encompass loan origination systems — we offer customers a powerful way to stay ahead of borrower intent when timing is everything.”

The full August Mortgage Monitor report includes additional data on mortgage performance, origination trends and home-price movements.