Lock Activity Suggests Q1 2021 Refi Originations to Remain Near Record Highs as Rate Increases Cloud Q2 Outlook; Servicer Retention Hits New Low
- A record-breaking $4.3 trillion in mortgages was originated in 2020, with $2.8 trillion in refinances – also an all-time high – and $1.5 trillion in purchase loans, the largest annual volume since 2005
- Rate lock data – a good indicator of lending activity – through mid-February suggests Q1 2021 refis could hold steady near record levels before experiencing headwinds from recent rate hikes
- However, an also likely 25% reduction in purchase lending in the first quarter would bring total origination volume down 10% from Q4 2020
- Despite originations hitting all-time highs across the board in Q4 2020, servicers retained just 18% of the estimated 2.8 million homeowners who refinanced in Q4, the lowest share on record
- Borrowers refinancing to improve their rate and/or term were retained at a significantly higher rate (23%) than those pulling cash out as part of the transaction (11%)
- As of March 4, just under 13 million refinance candidates remain – the lowest volume since May 2020 and a reduction of 5.2 million (29%) in just the past three weeks.
Picture: Pixabay
