Mortgage refinancings have hit a record high, as the U.S. housing market continues to rebound from the initial shock of the coronavirus.
With interest rates at all-time lows, refinancings jumped more than 200 percent in the second quarter compared to a year ago, according to the Wall Street Journal. Lenders provided more than $1 trillion in home loans — including both originations and refinancings — between April and June, the Journal reported, citing mortgage data firm Black Knight. That marked the biggest quarter on record since Black Knight began collecting the data in 2000.
Purchase mortgages, however, dropped 8 percent from a year earlier, according to the Journal.
After a short drop at the onset of the pandemic, home sales have risen steadily as people are pivoting to working from home and are seeking to purchase larger spaces. In July, home sales rose almost 25 percent, the highest monthly increase on record.
Mortgage rates fell below 3 percent in July, prompting a burst of refinancings and new home loan purchases.
Millennials have been responsible for much of the boost to the mortgage and housing market. Millennials made up 61 percent of home loans in July, up five percentage points from June, according to a recent report from mortgage software company Ellie Mae.
Mortgage rates dropped after the Federal Reserve announced earlier this year that it would slash interest rates to close to zero, with plans to buy hundreds of billions of dollars in mortgage backed securities.
[WSJ] — Keith Larsen