Refinancing Drove Mortgage Lending to its Best Quarter in 20 Years
Back in March, reports showed that the fourth quarter of 2020 was the mortgage industry’s best quarter since at least 2000. That record stood for all of three months.
According to a new report from ATTOM Data Solutions, mortgage lenders originated $1.16 trillion in mortgages in the first quarter, besting the $1.06 trillion originated in the first quarter and establish a new quarterly high since at least 2000.
ATTOM’s report also showed that there were 3.77 million mortgages originated in the first three months of 2021, which is 14-year high. According to ATTOM, this is the first time there was an increase in mortgages originated from a fourth quarter to a first quarter since 2009.
The increase in lending was driven primarily by refinances, which “outpaced declines in home-purchase lending and home-equity lines of credit,” according to ATTOM.
ATTOM’s report showed that 68% of all home loans originated in the first quarter were refinances. The refinancing share hasn’t been that high in any quarter since the first quarter of 2013.
According to ATTOM’s report, 2.55 million of the 3.77 million mortgages originated in the first quarter were refinances, a 12% increase over the fourth quarter of 2020.
While refinances were increasing, purchase lending and HELOC activity was declining. According to ATTOM’s report, purchase lending fell by 7% in the first quarter. HELOC lending, meanwhile, fell by 27%.
The fact that purchase lending and HELOCs declined in the first quarter isn’t unheard of. In fact, according to ATTOM, purchase lending and HELOCs typically slow down in the first quarter. Nevertheless, refinance activity buoyed the mortgage business as a whole.
"Homeowners lined up to refinance their loans in ever-growing numbers during the first quarter of 2021, making for a highly unusual quarterly increase in total lending activity for that time of year,” said Todd Teta, chief product officer at ATTOM Data Solutions.
“The home-mortgage industry almost always slows down in Winter, but not this year because of so many homeowners hopping on super-low interest rates to reduce their monthly payments," Teta continued.
"Eventually, the refi side of the lending business will ease up after enough homeowners get in on the good deals,” Teta concluded. “But there's no sign of that happening in the very near future - yet another indicator of how the housing market remains strong amid uncertain economic times connected to the pandemic."