Mortgage Originations Are on Pace for Best Year Ever
Record-low interest rates and strong demand for homes boost lenders during Covid-19 pandemic
The boom in mortgages for homes including this Jacksonville, Fla., development has extended into the final quarter of 2020.
Photo: Charlotte Kesl for The Wall Street JournalAmericans are poised to take more mortgages this year than they did even during the run-up to the 2008-09 financial crisis.
In the first nine months of the year, lenders extended $2.8 trillion of mortgages, according to industry-research firm Inside Mortgage Finance. The boom has extended into the final quarter of 2020, prompting analysts to predict origination volume will exceed the prior record of $3.7 trillion in 2003.
The home-lending surge is an unexpected reverberation of the Covid-19 recession. The pandemic has put millions of people out of work and made it tougher to show homes to prospective buyers. But it has also ushered in record-low interest rates that prompted millions to refinance and lower their monthly payments or trim the length of their loans.
“2003 was a record that nobody thought would ever be achieved again,” said Guy Cecala, chief executive of Inside Mortgage Finance. That year low 30-year mortgage rates led to a surge in refinancings.
In the first three quarters of 2020, refis made up 65% of all originations, on pace to be the highest share since 2012, according to Inside Mortgage Finance.
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