Record low mortgage rates at the end of 2019 made a significant impact on residential refinance mortgage numbers, according to Attom Data Solutions’ Q4 2019 U. S. Residential Property Mortgage Origination report.
Refinance mortgages originated in Q4 2019 increased 104 percent from Q4 2018, with 1.27 million mortgages refinanced by residential property owners, according to new data released Thursday. That number brings the figure up 20 percent from Q3 2019, which means refinance mortgages reached their highest point since the first quarter of 2013.
Todd Teta | ATTOM Data Solutions
“The fourth quarter was a banner period for residential mortgages across the United States, as declining interest rates and a strong economy helped spur more than 2 million borrowers to sign on for new or refinanced loans,” Todd Teta, chief product officer at Attom Data Solutions, said in a statement.
“Refinancing largely drove the trend, with more than twice as many homeowners trading in higher-interest mortgages for cheaper ones than in the same period of 2018,” Teta continued.
Likewise, total residential loan originations increased by 40 percent year-over-year in the fourth quarter, also reaching a high since the third quarter of 2016.
Attom Data Solutions
The trend in increased refinance originations swept the nation, with 207 out of 209 metropolitan areas of a population of greater than 200,000 reporting an increase. Some of the more significant origination increases were in Los Angeles (158.8%); Chicago (144.5%); New York City (91.5%); and Dallas (90%).
Beaumont, Texas (originations decreased by 6.8 percent) and McAllen, Texas (originations decreased by 9.1 percent) were the only two metro areas that deviated from the widespread increase.
Meanwhile, purchase mortgage originations decreased nationally by 13.3 percent from Q3 2019, but increased by 3.1 percent year-over-year from Q4 2018. Out of the 209 metro areas with a population greater than 200,000 analyzed by Attom, 141 saw residential purchase mortgage increase year-over-year, including Los Angeles (13.8%); Chicago, (1.6%); Washington, D.C. (3.7%); Philadelphia (2.1%); and Miami (2.9%).
In the realm of home equity lines of credit (HELOCs), the fourth quarter of 2019 saw a decrease of 8.9 percent from third quarter of 2019, and likewise, a decrease of 5.5 percent year-over-year. The breakdown of metropolitan areas of greater than 200,000 people that saw an increase versus a decrease in HELOCs was nearly split, with 56.5 percent of metros reporting a decrease in HELOC originations and 43.5 percent of metros reporting an increase in them.
Federal Housing Administration (FHA)-backed loans decreased slightly in the fourth quarter of 2019 to 13 percent from 13.2 percent of loans in the third quarter. However, this number remained close to one full percentage point above 12.3 percent of loans backed by the FHA in Q4 2018.
U.S. Department of Veterans Affairs (VA)-backed loans reached their highest point since at least 2000, coming in at 9.1 percent of all residential property loans originated in Q4. The number increased from 8.7 percent in Q3 2019 and 6.3 percent year-over-year from Q4 2018.
“These trends could all change when the economic fallout from the coronavirus outbreak hits,” Teta noted. “But the last few months of 2019 saw a burst of lending activity not seen in the U.S. housing market for several years.”
