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Mortgage Originations Hit an All-Time High in Q4

By Eric Volkman - Feb 18, 2021 at 7:25PM

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Refinancing is the rocket fuel powering the latest home-lending boom.

The coronavirus pandemic isn't having a deleterious effect on the U.S. mortgage market. In fact, it's quite the opposite -- research on household debt published by the New York Federal Reserve on Wednesday reveals that mortgage originations reached a record high in Q4, rising to $1.2 trillion during the quarter.

As the New York Fed pointed out, this exceeded in nominal terms the figure recorded in Q3 2003, the height of the so-called "refinance boom" of the early 2000s. Then, as now, comparatively low interest rates fueled sharp rises in refinancing for existing mortgage holders. Refinanced mortgages are included in the tallying of originations.

Family in front of SOLD sign on a house's front yard.

Image source: Getty Images.

"Notably, the overall median mortgage origination credit scores jumped up, reflecting a high share of refinances," the New York Fed quoted senior vice president Wilbert Van Der Klaauw as saying.

These days, with the combination of wafer-thin interest rates and the stay-in-place measures engendered (or even at times, mandated) by the coronavirus pandemic, consumers are prioritizing home ownership. Unlike other common forms of household debt such as credit card balances, American mortgage balances increased in Q4, rising by $182 billion to slightly over $10 trillion.

Consequently, the more assertive mortgage specialists are benefiting handsomely from the trend. Although top home lender Rocket Companies (RKT 4.32%) is still several days away from unveiling its Q4 results, its Q3 figures tell a tale of robust growth. For the quarter, Rocket's closed loan origination volume blasted 122% higher on a year-over-year basis to nearly $89 billion.

With the coronavirus still a threat and interest rates continuing to scrape the floor, Rocket and its ilk have a bright near-term future, at the very least. On Thursday, the company's stock rose marginally, against the 0.4% drop of the S&P 500 index.

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