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Mortgage

Boom: Mortgage lending just had its biggest quarter in 14 years

Originations climb to highest level since 2005

It probably won’t come as a surprise to those in the mortgage business that the fourth quarter of 2019 was a big one, considering that originations continued to rise throughout the year thanks to near-historic lows in mortgage rates.

But just how big the fourth quarter actually was may make the most ardent observers stand up and take notice.

To that point, a first look at the lending data for the fourth quarter from the Federal Reserve Bank of New York shows that mortgage lending just experienced its biggest quarter in 14 years.

According to the New York Fed, there were more than $750 billion in new mortgages originated in the last three months of 2019, more than in any quarter since the fourth quarter of 2005.

It’s a stark reversal from the first quarter of 2019, when there were only $344 billion in mortgage originations. That figure was the lowest dollar amount of mortgage originations in any quarter since the third quarter of 2014.

Fast forward just a few months and originations, which the Fed measures as appearances of new mortgage balances on consumer credit reports, hit $752 million in the fourth quarter.

According to the New York Fed, much of the growth over the third quarter, when there were $528 billion in originations, was due to a “large increase” in mortgage refinances.

As the Fed data shows, mortgage originations rose in each quarter of 2019, rising from $344 billion in the first quarter to $474 billion in the second quarter to $528 billion in the third quarter, and finally to $752 billion in the fourth quarter.

Add all those figures up and it means that the full year origination volume for 2019 was approximately $2.1 trillion.

That’s well above the latest forecast from the Mortgage Bankers Association, which suggested that lending would hit $2.07 trillion in 2019.

That figure would have been a 12-year high, and the actual lending total was even higher than that.

Overall, the Fed report showed that total household debt increased by $193 billion to $14.15 trillion in the fourth quarter of 2019. That’s the 22nd consecutive quarter with an increase in consumer debt.

Mortgage balances, which are the largest component of household debt, increased by $120 billion in the fourth quarter to $9.56 trillion total.

According to the Fed, despite the sizable increase in originations, credit standards actually tightened slightly in the fourth quarter. The median credit score of newly originating borrowers increased in the fourth quarter for mortgages to 770, a five-point increase from the third quarter.

The Fed states that this increase is likely the result of an increase in refis.

The Fed report also showed that non-housing debt balances rose by $79 billion in the fourth quarter, with increases in various debt types, including $16 billion in auto loans, $46 billion in credit card balances, and $10 billion in student loans.

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