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Residential Refinance Mortgages Make Up Nearly Two-Thirds of Home Loans in Second Quarter Of 2020

An impressive 1.69 million refinance mortgages secured by residential properties (1 to 4 units) were…

  • September 23, 2020

An impressive 1.69 million refinance mortgages secured by residential properties (1 to 4 units) were originated in the second quarter of 2020 in the United States, according to property data provider ATTOM Data Solutions. That figure was up almost 50 percent from the prior quarter and more than 100 percent from the same period in 2019, to the highest level in seven years.

These figures are from ATTOM Data Solutions’ just-released second-quarter 2020 U.S. Residential Property Mortgage Origination Report.

With interest rates hovering at historic lows of around 3 percent for a 30-year fixed-rate loan, refinance mortgages originated in the second quarter of 2020 represented an estimated $513 billion in total dollar volume. That number was up 130 percent from a year ago, to the highest point in almost 17 years.

Refinance loans helped drive the total number of home loans in the second quarter of 2020 up to 2.72 million, an 11-year high.

Homeowners rolling over old mortgages into new ones accounted for 62 percent of all lending activity in the second quarter of 2020, up from 54.5 percent of loans in the first quarter of 2020 and from 39.6 percent in the second quarter of 2019.

While refinancing activity soared, purchase mortgage activity dropped to just 28.8 percent of all home loans in the second quarter of 2020 and home equity lending or HELOCs declined to only 9.2 percent – the lowest levels in seven years.

That happened as the worldwide Coronavirus pandemic swept across the United States, stifling consumer spending and prompting untold numbers of potential home seekers abiding by social distancing recommendations to stay out of the housing market.

Refinance originations double in three-quarters of the nation

Lenders originated 1,686,340 refinance mortgages in the second quarter of 2020, up 47 percent from the first quarter of the year and up 126 percent from the second quarter of 2019, to the highest level since the second quarter of 2013.

Residential refinance mortgage originations increased from the second quarter of 2019 to the second quarter of 2020 in all but one of the 211 metropolitan statistical areas that had a population greater than 200,000 and at least 1,000 total loans. The number at least doubled in 158, or 74.9 percent, of those metro areas, led by Madison, WI (up 403.7 percent); Hilton Head, SC (up 358.7 percent); Charleston, SC (up 322.4 percent); Greenville, SC (up 321.8 percent) and Lincoln, NE (up 269.2 percent).

Metro areas with at least 1 million people that saw refinance activity at least doubled, year over year, in the second quarter of 2020 included Washington, DC (up 219.9 percent); Milwaukee, WI (up 213.1 percent); Austin, TX (up 211.9 percent); Raleigh, NC (up 205.3 percent) and Birmingham, AL (up 198.4 percent).

Pittsburgh, PA was the only metro area where refinance mortgages decreased in the second quarter, measured year over year (down 5.7 percent). Those with the smallest annual increases were Lexington, KY (up 7.5 percent); Myrtle Beach, SC (up 8.6 percent); Syracuse, NY (up 22 percent) and Gulfport, MS (up 25.4 percent).