Mortgage volume has 'banner quarter' in 3Q, hitting a 13-year high

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In the third quarter, mortgage lending shot up 45% from the year before and 17% quarterly to the highest amount of originations since 2007, according to Attom Data Solutions.

Consumers came out in droves to lock in record-low interest rates. Overall, 3.25 million home loans were completed in the quarter. Purchase originations accounted for 1.05 million of those, with rises of 25.4% annually and 28.1% quarterly. Refinances held the largest share of originations, at 1.96 million loans, up 84.5% from a year ago and 15.7% from the second quarter.

Home equity lines of credit — which the coronavirus has negatively impacted — decreased to a total of 244,555. That’s the fewest since 2014 and reflects a decrease of 28.7% year-over-year and 7.1% quarter-over-quarter.
"The home-loan industry got even busier in the third quarter of 2020, with the housing market still operating as if the recession brought on by the pandemic didn't exist," Todd Teta, chief product officer at Attom Data Solutions, said in the report. "Buyers and owners, lured by low mortgage rates, kept lining up for loans at levels not seen in more than a decade. The one difference in the third quarter was that purchase lending [growth] beat out refinance activity for the first time in more than a year."

The amplified lending generated $974.1 billion, jumping 52% year-over-year and 20% quarter-over-quarter, marking the most borrowed since 2005. Purchases brought in $336.3 billion, refinances $587.6 billion and HELOCs about $49.9 billion.

While Teta described the activity as "another banner quarter for lenders," he exercises caution, noting "the pandemic and other factors could come together and halt the market boom."

Among housing markets with populations over 1 million, the largest quarterly growth in purchases came in Boston (up 75.3%), Hartford, Conn., (up 52.6%) and San Jose, Calif., (up 49.8%). Only Baltimore (down 7%) and Pittsburgh (down 3.6%) fell from the second quarter.

The largest quarterly rises in residential refis happened in Tucson, Ariz., (up 38.4%), Virginia Beach, Va., (up 37.8%) and Richmond, Va., (up 35%). Pittsburgh led the refi declines, falling 29.5%, followed by drops of 14.8% in Rochester, N.Y., and 9.6% in Detroit.

Mortgages backed by the Federal Housing Administration totaled 336,272. That made up 10.3% of all residential originations, down from 13.2% year-over-year and up from 9.4% from last quarter. Loans backed by the U.S. Department of Veterans Affairs compiled 283,216 mortgages. The VA share of 8.7% declined slightly from 8.8% a year ago and inched up from 8.5% in the second quarter.

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Purchase Refinance HELOCs Originations