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2020's historic year in lending is likely to lead to a record-breaking $4 trillion in originations according to Black Knight Inc.'s Mortgage Monitor Report. The report features rate lock data — historically a good indicator of lending activity which found that Q3 2020 mortgage originations are set to break quarterly records in terms of refinance, purchase and total lending volumes.
"Rate lock data from Black Knight's Compass Analytics division shows that Q3 2020 mortgage originations are on track to break quarterly records across the board and remain strong moving into Q4," said Black Knight Data and Analytics president Ben Graboske. "This suggests that origination and prepayment activity will likely remain elevated well into Q4 2020. September lock activity held relatively level with August, but through October 19, lock activity overall is up 4% from the month prior – with purchase locks up 6% and refinance locks up 3% thus far. Interest rates setting new record lows in mid- and late October will likely continue to fuel lock activity in coming weeks."
"Assuming a 45-day lock-to-close period, not only could Q3 2020 set quarterly records for refinance, purchase and total origination volumes alike, but that volume could remain at or near peak levels through November 2020 – if not longer. Estimated origination volumes based on underlying locks suggest both Q3 refinance and total originations could be up 25% or more from Q2 while purchase lending could be up by 35% or more. This would push 2020 purchase lending to the highest level since 2005 and both refinance lending and total origination volumes to their highest levels ever. Indeed, total lending in 2020 is well on its way to easily eclipse the $4 trillion mark for the first time in history."
The report also revealed that home price appreciation has remained strong and the annual home price growth slowed to 0% in May marking the first time that home prices were flat year-over-year since early 2012. The Mortgage Monitor Report also stated that despite pandemic-related hurdles earlier this year, the data suggests that through November, purchase lending would already be up 11% from the same period in 2019 and is likely to grow even more in December.
Click here to view the full Mortgage Monitor Report.