Refis propelled the outbreak of the origins in 2020
A Consumer Financial Protection Bureau (CFPB) analysis of Home Mortgage Disclosure Act (HMDA) data on residential mortgage lending trends, Data Point: 2020 Mortgage Market Activity and Trends, found that the total number of closed fixtures, as well as requests, increased significantly between 2019 and 2020.
Passed by Congress in 1975, the HMDA requires many financial institutions to maintain, report, and publicly disclose mortgage loan information.
Fixed-capital arrangements (excluding reverse mortgages) increased 65.2% in 2020, from 8.3 million in 2019 to 13.6 million in 2020, with much of the increase due to the refinancing boom in 2020. The data point also notes that while the number of financial institutions reporting HMDA 2020 data has decreased compared to 2019, the number of records closed in 2020 has increased compared to the previous year. While mortgage activity has generally increased, year over year significant differences between demographic groups have persisted, including higher interest rates and refusals among black and Hispanic consumers in the mortgage market. .
“The first observations on the country’s mortgage market in 2020 are good news, with improvements in the overall volume of home purchase and refinancing loans compared to 2019,” said Dave Uejio, acting director of CFPB. “Unfortunately, black and Hispanic borrowers continued to have fewer loans, are more likely to be turned down than non-Hispanic White and Asian borrowers, and pay higher median interest rates and total loan costs. It is clear from this data that our economic recovery from the COVID-19 pandemic will not be robust if it remains uneven for mortgage borrowers of color. “
A 2020 HMDA data review marks the third year of data incorporating changes made to HMDA by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Changes included new data points, revisions of certain existing data points and the authorization of the CFPB. to require new data points. The CFPB published a final rule implementing significant changes in October 2015 (HMDA rule 2015), reflecting the changing needs of homeowners and the evolution of the mortgage market. Since these changes started with HMDA 2018 data, the new report only covers HMDA data for the period 2018-2020 and focuses on trends in mortgage applications and origination during this period.
Other trends in mortgage applications and fixtures found in the 2020 HMDA include:
- 4,472 financial institutions declared at least one closed file in 2020, compared to 5,505 financial institutions that declared in 2019;
- The number of home loans secured by properties built on site, from one to four families, increased by about 387,000, while the number of refinancing loans increased 149.1% to 3.4 million. in 2019 to 8.4 million in 2020;
- The number of open-ended lines of credit (excluding reverse mortgage loans) in 2020 decreased by 16.6%, from 1.04 million in 2019 to 869,000 in 2020;
- The share of loans secured by indefinite mortgages for properties built on site, for one to four families, senior, primary residences for black borrowers increased in 2020, and the share of refinancing loans for black borrowers. Asian borrowers increased in 2020; and
- The refinancing boom observed in 2020 has largely continued trends since the second quarter of 2019.
Click here to view CFPB data point: Mortgage Market Activity and Trends in 2020.