Residential mortgages originated in the fourth quarter of 2020 were at the highest level in almost 14 years, according to a recent report from ATTOM Data Solutions.
The company’s fourth-quarter 2020 U.S. Residential Property Mortgage Origination Report shows 3.51 million residential property mortgages originated in the fourth quarter of 2020, up 5.5% from the previous quarter and 48% from the fourth quarter of 2019.
Lenders issued $1.06 trillion worth of mortgages in the fourth quarter of 2020 – up 6% from the previous quarter and up 55% from a year ago — the largest quarterly amount since at least 2000, the report finds. The quarterly rate of increase in loans and dollar volume represented the largest gains during any fourth-quarter period since 2011.
The report found the boost in mortgage activity last quarter came mostly from another jump in refinance mortgages but noted the overall figure was also prompted by strong home-purchase lending and home equity lines of credit. In the fourth quarter of 2020 lenders refinanced 2.23 million home mortgages, 12% more than the previous quarter and 71% above the fourth quarter of 2019.
Homeowners taking advantage of low rates to roll over old mortgages into new ones continued to account for the majority of home loans (63%) in the fourth quarter of 2020, according to the report.
“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,” said Todd Teta, chief product officer at ATTOM Data Solutions in a press release. “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 also found:
- HELOC lending was down 3% from the prior quarter and down 22.2% from the previous year, marking the lowest point since the first quarter of 2014. However, the dollar volume of HELOC loans in the fourth quarter rose 5.3% from the previous quarter to $54.76 billion, the largest quarterly increase since the second quarter of 2019.
- Federal Housing Administration-backed mortgages accounted for 10.3% of all residential property loans originated in the fourth quarter of 2020, down from 10.5% the previous quarter and from 13.1% in the fourth quarter of 2019.
- Residential loans backed by the U.S. Department of Veterans Affairs accounted for 8.3% of all residential property loans originated in the fourth quarter of 2020, down from 8.8% in the previous quarter and 9.3% a year ago.
- Median down payments and amounts borrowed again reached new heights in the fourth quarter of 2020 as the median down payment for single-family homes and condos purchased with financing was $24,500, up 19.2% from $20,556 in the previous quarter and 82.3% from $13,441 in the fourth quarter of 2019, marking another new high dating back to at least 2000.
- The median loan amount for new homes purchased in the fourth quarter was $280,000, up 3.4% from the prior quarter and 24.7% from the fourth quarter of 2019, also marking a new high since 2000.