The mortgage market reportedly enjoyed its best year in 2019 since the height of the precrisis boom amid a refinancing surge.
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, the Wall Street Journal explained.
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,” the Journal explained.
“When a large and cyclical part of the economy—housing—is starting to improve, it’s a good sign for the economy at large,” Sam Khater, chief economist of mortgage-finance giant Freddie Mac, told the Journal.
The Mortgage Bankers Association estimates that refinancings made up 38% of mortgage originations last year
It isn’t clear how long the mortgage boom will last. Refinancings are expected to decline through 2021, dragging down overall mortgage volume, according to estimates from the Mortgage Bankers Association.
“It’s very likely that the first quarter or first half of 2020 will be bigger than the first half of 2019,” said Guy Cecala, chief executive of Inside Mortgage Finance. “People are encouraged by lower rates.”
Meanwhile, U.S. home prices rose the most in 19 months in December, fueled by low mortgage rates and the tightest supply on record, according to Redfin.
Prices jumped 6.9% from a year earlier to a median of $312,500, the biggest annual increase since May 2018, the brokerage said in a report Friday. Values fell in just two of the 85 largest metropolitan areas Redfin tracks: New York, with a 2.4% decline, and San Francisco, down 1.7%, Bloomberg reported.
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