The housing markets have been on fire. Home prices have surged across most of the nation. One reason for this is lower mortgage rates. Another is the migration of people from large cities, mostly on the coasts, to more affordable, smaller cities. Finally, middle- and upper-class incomes stayed solid over the course of the COVID-19 pandemic, for the most part. The mortgage activity has come in two parts. The first is new home mortgages. The second is the refinancing of mortgages as people go for lower rates.
Research firm ATTOM Data Solutions has just issued its “Q1 2021 U.S. Residential Property Mortgage Origination Report.” The 3.77 million mortgages issued in the quarter secured by residential properties was 71% higher than in the same quarter a year ago. Of these, 2.55 million were refinancing, which was up 113% from the same period last year.
Todd Teta, chief product officer at ATTOM Data Solutions pointed out:
Homeowners lined up to refinance their loans in ever-growing numbers during the first quarter of 2021, making for a highly unusual quarterly increase in total lending activity for that time of year. The home-mortgage industry almost always slows down in Winter, but not this year because of so many homeowners hopping on super-low interest rates to reduce their monthly payments.
Refinancing also rose from the fourth quarter of last year in 78.7% of the 211 metro areas with populations over 200,000. This activity rose by at least 10% in 114 of these markets.
Among markets with more than 200,000 people, the largest increase since the fourth quarter of last year was in Jackson, Mississippi, where it rose 92.8%. In Springfield, Massachusetts, it was higher by 59.5%, and Medford, Oregon, saw a jump of 57.3%. Buffalo, New York, followed with a rise of 55.0%, and then Macon, Georgia, where the figure was 53.3% higher. Clearly, there was no geographic pattern.
Among cities with over a million residents, aside from Buffalo, were Las Vegas (up 37.2%), Milwaukee (31.8%), Atlanta (31.3%) and Providence, Rhode Island, (31.2%). Once again, there is no geographic pattern.
While it is difficult to forecast if this refinancing activity will continue, interest rates have started to move higher, which at some point will make the action less attractive.