Residential refinance mortgages reach 7-year high

by Mark Rosanes23 Mar 2020

Residential refinance mortgages more than doubled in the fourth quarter of 2019, reaching their highest point in nearly seven years, according to a new report from Attom Data Solutions. 

From October to December 2019, the number of refinance mortgages secured by residential property reached 1.27 million units, up 20% from the previous quarter and 104% year-over-year, the highest since the third quarter of 2013.   

Benefitting from near all-time lows in interest rates, 2019 fourth-quarter refis generated about $391.3 billion, rising 19% from the previous three months and 138% from a year ago to the highest level since the first quarter of 2013. 

Total residential loan originations were at 2.27 million units, posting a 40% year-over-year growth in the fourth quarter of 2019 and hitting the highest level since the third quarter of 2016. 

"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," said Todd Teta, chief product officer at Attom Data Solutions. "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. These trends could all change when the economic fallout from the coronavirus outbreak hits. But the last few months of 2019 saw a burst of lending activity not seen in the U.S. housing market for several years." 

Nationwide increase 

The report also revealed that more than 1.2 million residential refis in the fourth quarter of 2019 originated from lenders. The figure is up about 20% from the previous quarter and more than 104% from the same period last year. 

The report analyzed 209 metropolitan statistical areas with a population greater than 200,000 and saw residential refinance mortgage originations increase year-over-year in all but two areas. New York registered a 91.5% jump, Los Angeles rose 158.8%, Chicago was up 144.5%, Dallas rose 90% and Houston was up 32.9%. 

Only Beaumont and McAllen, both in Texas, experienced a drop at 6.8% and 9.1%, respectively.  

Residential purchase mortgages rise slightly 

Lenders originated almost 686,000 residential purchase mortgages in the last three months of 2019, dropping 13.3% from the previous quarter but up 3.1% year-over-year, according to the report. 

The uptick was seen in 141 of the 209 metro areas, including Los Angeles, Ca. (13.8%), Chicago, Il. (1.6%), Washington, DC (3.7%), Philadelphia, Pa. (2.1%) and Miami, Fl (2.9%). 

Among those that experienced a decline were New York, NY (1%), Dallas, Tx. (14.7%), Houston, Tx. (16.8%); Minneapolis, Mn. (3.8%) and Tampa, Fl. (6.9%). 

HELOC originations down 6% 

In the last quarter of 2019, home equity line of credit originations on residential properties decreased by 8.9% from the preceding three months and 5.5% year over year.  

More than half (56.5%) of the metro areas analyzed for the report followed the trend, including New York, which dropped 13.5%, Los Angeles (down 20.6%), Chicago (down 4.9%), Washington, D.C. (down 14.5%) and Philadelphia (down 0.3%). 

HELOC originations from the rest of the areas either climbed or stayed the same, with Dallas (up 3.9%), Houston (37%), Boston (4%), St. Louis (5.1%) and Charlotte, N.C. (6.4%) among the movers. 

FHA loan share down quarterly, but up annually 

Mortgages backed by the Federal Housing Administration accounted for 294,206, or 13%, of all residential property loans originated in the fourth quarter of 2019. That was down from 289,593 units, or 13.2%, from the previous quarter, but up 12.3% to 199,004 units year over year. 

Meanwhile, residential loans backed by the Department of Veterans Affairs accounted for 9.1% of all residential property loans originated from October to December 2019, the highest percentage in almost two decades. The figure was up from 8.7% from the previous three months and 6.3% year over year.