According to results posted from the most recent ATTOM Data Solutions second-quarter 2020 U.S. Residential Property Mortgage Origination Report [1], residential refinance mortgages are more popular than ever. In fact, data show that residential mortgages made up nearly 75% of all home loans during Q2 2020.
Specific statistics showed that refinance mortgages secured by residential properties (1 to 4 units) totaled 1.69 million across the nation. This number shows an dramatic rise by nearly 50% from the first quarter and more than a 100% rise from this same time last year. It also marks the highest level of residential refinance mortgages in seven years.
The fact that current interest rates are now at a record breaking low (right at 3% for a 30-year fixed-rate loan), refinance mortgages during Q2 2020 represented roughly $513 billion in total dollar volume. This statistic also showed an uptick from this same time a year ago (by 130%), bringing the number to its greatest height in more than 16 years.
The total number of home loans during this second quarter rose up to 2.72 million, representing an 11-year high. These home loans, according to experts, were driven greatly by refinance loans. The percentage of homeowners rolling over old mortgages into new ones was revealed to represent 62% of total lending activity during Q2 2020, rising from the previous quarter’s 54.5% showing and last year’s second quarter percentage (39.6%).
In direct contrast to these aforementioned soaring statistics in the refinancing realm, purchase mortgage activity plummeted, making up just above one-quarter (28.8%) of all home loans during Q2 2020. Also experiencing a dip was home equity lending (HELOCs), which lowered to a making up a mere 9.2 percent, marking the lowest numbers in the past seven years.
Experts point to possible—and probable—reasons as to why such low numbers occurred as being the direct repercussions of the current COVID-19 crisis. As the Coronavirus pandemic continued to wreak havoc across the United States, consumer spending was among the casualties. As such, the housing market suffered as many would-be buyers held back from jumping into the fray due to social distancing recommendations and myriad other pandemic-related reasonings.