Rise in 3Q Home-Purchase Mortgages Powers Increase in Residential Lending
ATTOM Data Solutions, Irvine, Calif., reported 3.25 million mortgages secured by residential property originated in the third quarter, up 17 percent from the second quarter and 45 percent from a year ago, to the highest level in 13 years.
The company’s third-quarter U.S. Residential Property Mortgage Origination Report noted with interest rates dipping below 3 percent for a 30-year fixed-rate loan, home mortgages originated in the third quarter represented an estimated $974.1 billion in total dollar volume, up 20 percent from the second quarter and 52 percent from a year ago, to the highest point since 2005.
The increases came in part from a jump in purchase mortgages, which grew faster on a quarterly basis than the number of refinance loans for the first time in more than a year.
The report said lenders issued 1.05 million home-purchase mortgages in the third quarter, up 28 percent from the second quarter and 25 percent from a year ago. Dollar amount of purchase loans jumped to $336.3 billion in the third quarter of 2020, a 35 percent increase from the prior quarter and a 36 percent increase from a year ago.
Refinance activity, meanwhile, continued to represent the majority of home loans and kept growing, but at a smaller quarterly pace than purchase lending. The number of refinancing loans went up only 16 percent from the second quarter to the third quarter of 2020, to 1.96 million, while the amount refinanced increased 15 percent, to $587.6 billion.
As a result, ATTOM said, money lent to buyers taking out new mortgages in the third quarter represented 34.5 percent of all lending, up from 30.6 percent in the second quarter of 2020; the portion refinanced by owners rolling over old mortgages dipped from 63.1 percent in the second quarter to 60.3 percent in the third quarter.
“The home-loan industry got even busier in the third quarter of 2020, with the housing market still operating as if the recession brought on by the pandemic didn’t exist,” said Todd Teta, chief product officer with ATTOM Data Solutions. “Buyers and owners, lured by low mortgage rates, kept lining up for loans at levels not seen in more than a decade. The one difference in the third quarter was that purchase lending beat out refinance activity for the first time in more than a year. However, we do cautiously note again, as we have with other recent market reports, that the pandemic and other factors could come together and halt the market boom. In the meantime, the third quarter stands out as another banner quarter for lenders.”
Other report findings:
–Lenders originated 1,050,624 purchase mortgages in the third quarter, up 28.1 percent from the second quarter and up 25.4 percent from a year ago to the highest level since third quarter 2006.
–Lenders issued 1,955,668 residential refinance mortgages in the third quarter, up 15.7 percent from the second quarter and 84.5 percent from a year ago.
–244,555 home equity lines of credit (HELOCs) were originated on residential properties in the third quarter, down 7.1 percent from the previous quarter and down 28.7 percent from a year earlier. The latest number marked the lowest point since the first quarter of 2014.
–Mortgages backed by FHA accounted for 336,272, or 10.3 percent of all residential property loans originated in the third quarter, up from 9.4 percent of all loans in the second quarter, but down from and 13.2 percent a year ago.
–Residential loans backed by the VA accounted for 283,216 or 8.7 percent of all residential property loans originated in the third quarter, the same percentage as in the previous quarter but down slightly from 8.8 percent a year ago.
–The median down payment on single-family homes and condos purchased with financing in the third quarter was $20,775, up 48.9 percent from $13,950 in the previous quarter and 68.6 percent from $12,325 a year ago, the highest recorded since at least 2000.
–Among homes purchased in the third quarter, the median loan amount was $275,500 – also a new high since 2000. The amount was up 10.3 percent from the prior quarter and 24.2 percent from the third quarter of last year.
