Refinancing Boom Fuels Mortgages to Postcrisis Record: The mortgage market in 2019 had its best year since the height of the precrisis boom, the latest sign that housing is firming up after showing signs of weakness early last year, according to an article on Realtor.com.
Lenders extended $2.4 trillion in home loans last year, the most since 2006, according to industry research group Inside Mortgage Finance. That was also a 46% increase from 2018.
Robust mortgage lending is generally a good sign for housing, which has seen a rebound in price growth and home sales after a period of declining gains. A refinancing frenzy, induced by last year’s trio of interest-rate cuts, fueled the mortgage making and helped steady the industry. The refinancing boom also bodes well for the broader economy, since homeowners saving on their monthly mortgage payments are likely to spend more on goods and services.
“When a large and cyclical part of the economy—housing—is starting to improve, it’s a good sign for the economy at large,” said Sam Khater, chief economist of mortgage-finance giant Freddie Mac.
The Mortgage Bankers Association estimates that refinancings made up 38% of mortgage originations last year.
The average rate on the 30-year fixed-rate mortgage, the most popular home loan in the U.S., dropped to 3.74% at the end of 2019, down from 4.55% a year earlier. Freddie Mac said Thursday that the average rate is now around 3.6%, its lowest level in more than three months.
Mortgage making accelerated at the end of the year. Last year’s fourth-quarter totals were the biggest quarter since the third quarter of 2005.
December sales of existing homes jumped nearly 11% from the year before, according to the National Association of Realtors. The NAR said, though, that the year-earlier period had been a particularly weak month for sales in part because of buyers’ uncertainty around the federal government shutdown.
But the uptick in mortgage lending doesn’t mean buyers will have an easy time this spring. Major barriers including a lack of housing supply and relatively tight bank-lending standards are pushing homeownership out of reach for many Americans.