ATTOM: Refis Make Up 2/3 of 2nd Quarter Loans, Highest Level in 7 Years
ATTOM Data Solutions, Irvine, Calif., released its second-quarter U.S. Residential Property Mortgage Origination Report, showing 1.69 million refinance mortgages secured by residential properties (1 to 4 units) originated, up nearly 50 percent from the prior quarter and more than 100 percent from a year ago, to the highest level in seven years.
The report said with interest rates hovering at historic lows of around 3 percent for a 30-year fixed-rate loan, refinance mortgages originated in the second quarter represented an estimated $513 billion in total dollar volume. That number was up 130 percent from a year ago, to the highest point in nearly 17 years.
Refinance loans helped drive the total number of home loans in the second quarter of 2020 up to 2.72 million, an 11-year high. Homeowners rolling over old mortgages into new ones accounted for 62 percent of all lending activity in the second quarter, up from 54.5 percent of loans in the first quarter and from 39.6 percent a year ago.
While refinancing activity soared, purchase mortgage activity dropped to just 28.8 percent of all home loans in the second quarter of 2020 and home equity lending or HELOCs declined to only 9.2 percent – the lowest levels in seven years. That happened as the coronavirus pandemic swept across the United States, stifling consumer spending and prompting untold numbers of potential home seekers abiding by social distancing recommendations to stay out of the housing market.
“The second quarter of 2020 really was a tale of two markets for lenders,” said Todd Teta, chief product officer with ATTOM. “One saw a continued flood of homeowners refinancing their loans at lower interest rates while the other saw a drop in home-purchase and home-equity borrowing as the economy sagged under virus-related lockdowns. “How this plays out in the third quarter will depend on how many homeowners still want to roll over their loans and whether the economy recovers enough to boost home sales. The lending market remains buoyed by cheap money but clouded by major uncertainty.”
Key report findings:
–Lenders originated 1,686,340 refinance mortgages in the second quarter, up 47 percent from the first quarter and up 126 percent from a year ago to the highest level since second quarter 2013.
–Residential refinance mortgage originations increased year over year in all but one of the 211 metropolitan statistical areas that had a population greater than 200,000 and at least 1,000 total loans. The number at least doubled in 158, or 74.9 percent, of those metro areas. Pittsburgh, Pa., was the only metro area where refinance mortgages decreased in the second quarter (down 5.7 percent).
–Lenders originated 782,829 residential purchase mortgages in the second quarter, up 14 percent from the previous quarter, but down 2 percent from a year ago. Residential purchase mortgage originations decreased from a year ago in 132 of the 211 metro areas analyzed.
–Lenders originated 249,744 home equity lines of credit on residential properties in the second quarter, down 9 percent from the previous quarter and down 25 percent from a year earlier.
–Mortgages backed by FHA accounted for 248,544, or 9.1 percent, of all residential property loans originated in the second quarter, down from 12.6 percent of all loans in the first quarter and 13.4 percent a year ago to the lowest level since the first quarter of 2008.
–Residential loans backed by the VA accounted for 230,808, or 8.5 percent, of all residential property loans originated in the second quarter, down from 9.9 percent in the previous quarter, but up from 7.5 percent a year ago.
