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Mortgage Originations Hit New Highs: What Does This Mean for the Spring Market?

[Updated: Dec 11, 2020] Feb 27, 2020 by Liz Brumer
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Even with high home prices in many metro markets, homebuying and loan originations are soaring. The fourth quarter of 2019 marked new heights for mortgage originations, with loan originations rising 42 percent. This equals $752 billion in mortgage originations, the highest volume since the fourth quarter of 2005.

Housing debt, including mortgages and home equity lines of credit (HELOCs), rose to $9.56 trillion at year-end with HELOCs being the only housing debt to show a decline over the past 10 years.

And residential real estate isn't the only industry feeling the boost. According to the most recent quarterly report released by the Mortgage Bankers Association (MBA), commercial and multifamily loans also hit new heights during the fourth quarter of 2019, surpassing the 2007 loan origination.

With low interest rates and a seemingly strong economy, consumers continue to borrow -- and not just for homes. According to the Quarterly Report on Household Debt and Credit from the Federal Reserve Bank of New York, "Total household debt is now $1.5 trillion higher, in nominal terms, than the pre-recession peak of $12.68 trillion, set in the third quarter of 2008."

The fourth quarter of 2019 saw an increase of $79 billion in non-housing debt, including $16 billion in auto loans, $46 billion in credit card balances, and $10 billion in student loans.

Homebuyers and investors who are preparing to purchase real estate this spring should be ready to lock in the low rates, especially as fear around the spread of coronavirus knocks the 10-year treasury bond to record lows. Both 15-year and 30-year mortgages for a residential primary residence for a fixed-rate loan are below 4% as of this writing, making this a great time to secure a mortgage.

The lack of affordable housing and low rates, especially in areas with a housing shortage, means home sellers should be prepared for a competitive market this spring. Properties in good condition or with additional features that help them stand out from other listings, like a renovated kitchen or bathroom, will likely sell fast. Spring is typically a great time to sell, and homes that are priced right should still sell very quickly.

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