Housing News

Mortgage Lending Hit a 20-Year High at the End of 2020

Thanks in large part to mortgage interest rates that were comfortably below 3%, the mortgage industry just finished its best quarter since at least 2000.

According to a new report from ATTOM Data Solutions, lenders originated $1.06 trillion in mortgages in the fourth quarter alone, the highest figure in any quarter in at least 20 years.

Broken down by the number of loans, there were 3.51 million mortgages originated in the fourth quarter, more than had been originated in any quarter in nearly 14 years.

According to ATTOM's report, the big driver of the record-breaking quarter were refinances. Lenders refinanced 2.23 million mortgages for $666.8 billion in the fourth quarter. That's an increase of 12% over the third quarter in number of loans and an increase of 11% in total volume.

The report also showed just how dominant refinances were in the market. According to the report, 63% of the loans originated in the fourth quarter were refinances.

The increase in refinances was seen in nearly all areas of the country. According to the report, refinance activity increased in 88.3% of the largest cities in the country.

The largest quarterly increases were in Sioux Falls, South Dakota, where refinances were up 75.3%; Reno, Nevada, where refinances were up 55.5%; Toledo, Ohio, where refinances were up 55.1%); Lake Charles, Louisiana, where refinances were up 47.1%) and Chicago, where refinances were up 44%.

But ATTOM noted that home purchase lending was strong in the fourth quarter as well. According to the report, that figure declined slightly in the fourth quarter, but the decline was less than the typical fourth-quarter decline. During a typical fourth quarter, purchase lending tends to decline by more than 10%, but it only fell by 4% in the fourth quarter of 2020.

"Lenders continued working overtime across the United States in the fourth quarter of 2020, with increases in loans and dollar volumes rarely seen during a time of year when activity normally slows down," said Todd Teta, chief product officer at ATTOM Data Solutions.

"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," Teta continued.

"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," Teta added. "But the fourth-quarter data shows continued strong demand for new mortgages, especially among homeowners looking to refinance."