ATTOM: Refis Push 4Q Lending Activity Up 5.5%
ATTOM Data Solutions, Irvine, Calif., reported a 5.5 percent increase in residential mortgage activity during the fourth quarter and a nearly 50 percent increase from a year ago to its highest level in nearly 14 years.
The company’s quarterly U.S. Residential Property Mortgage Origination Report showed 3.51 million mortgages secured by residential property (1 to 4 units) originated in the fourth quarter. With interest rates remaining below 3 percent for most purchase and refinance loans, lenders issued $1.06 trillion worth of mortgages in the fourth quarter, up 6 percent from the third quarter and 55 percent from a year ago, to the largest quarterly amount since at least 2000. The quarterly rate of increase in loans and dollar volume represented the largest gains during any fourth-quarter period since 2011.
The report said lenders refinanced 2.23 million home mortgages in the fourth quarter, 12 percent more than in the third quarter and 71 percent higher than a year ago. The dollar amount of refinance loans rose to $666.8 billion, an 11 percent increase from the prior quarter and a 67 percent increase from a year ago.
ATTOM said homeowners taking advantage of low rates to roll over old mortgages into new ones continued to account for the majority of home loans in the fourth quarter. Those loans comprised 63 percent of all home loans, up from 60 percent in the third quarter and 55 percent a year ago.
Meanwhile, home-purchase lending activity fell by 4 percent from the third to the fourth quarter, and home equity credit lines fell by 3 percent. However, both of those declines were milder than usual for the fourth-quarter period of each year – a trend that Todd Teta, chief product officer with ATTOM, said actually represented additional signs of strength for the lending industry, noting purchase lending usually drops more than 10 percent during the fourth quarter of each year while the number of HELOCs decreases more than 5 percent.
“Lenders continued working overtime across the United States in the fourth quarter or 2020, with increases in loans and dollar volumes rarely seen during a time of year when activity normally slows down,” Teta said. “The rising numbers left another in a long string of markers showing how the housing market has mostly avoided economic damage stemming from the virus pandemic. As with other housing market measures, the appetite for loans among homeowners and home seekers in the coming months remains uncertain, depending on interest rates and multiple factors connected to the pandemic. But the fourth-quarter data shows continued strong demand for new mortgages, especially among homeowners looking to refinance.”
The report said the strong home-lending numbers during the fourth quarter came despite the coronavirus pandemic that continued to spread throughout the country, slowing or stalling major sectors of the economy and keeping unemployment high. A rush of homeowners and home seekers taking out various kinds of loans continued amid a scenario of low-interest rates and a desire of many households unscathed by the pandemic to trade life in congested, virus-prone urban areas for the more spacious confines of a house and yard.
Other report findings:
–Lenders issued 2,226,951 residential refinance mortgages in the fourth quarter, up 11.5 percent from the third quarter and 70.7 percent from a year ago. Dollar volume of refinance packages rose to $666.8 billion in the fourth quarter, up 11.4 percent from the prior quarter and 66.6 percent from a year earlier.
–Refinance activity increased from the third quarter to the fourth quarter in 189, or 88.3 percent, of the 214 metropolitan statistical areas that had a population greater than 200,000 and at least 1,000 total loans, and rose by at least 15 percent in 100 metro areas (46.7 percent).
–Lenders originated 1,037,790 purchase mortgages in the fourth quarter. While that was down 3.8 percent from the third quarter, the decrease represented the smallest quarterly decline in any fourth-quarter period since at least 2000. Measured year over year, purchase loans were up 37.7 percent from the fourth quarter of 2019.
–245,594 home equity lines of credit were originated on residential properties in the fourth quarter, down 3 percent from the previous quarter and down 22.2 percent from a year earlier. The latest count marked the lowest point since the first quarter of 2014. However, dollar volume of HELOC loans rose 5.3 from the third quarter to the fourth quarter, to $54.76 billion, the largest quarterly increase since second quarter 2019.
–Mortgages backed by FHA accounted for 362,326, or 10.3 percent of all residential property loans originated in the fourth quarter. That was down from 10.5 percent in the third quarter and from 13.1 percent a year ago.
–Residential loans backed by the U.S. Department of Veterans Affairs accounted for 290,116, or 8.3 percent, of all residential property loans originated in the fourth quarter, down from 8.8 percent in the previous quarter and 9.3 percent a year ago.
–The median down payment on single-family homes and condos purchased with financing in the fourth quarter was $24,500, up 19.2 percent from $20,556 in the previous quarter and 82.3 percent from $13,441 a year ago, marking a new high dating back to at least 2000. The median down payment of $24,500 represented 7.7 percent of the median sales price for homes purchased with financing during the fourth quarter, up from 6.6 percent in the previous quarter and from 5.2 percent a year earlier.
