The total number of closed-end originations as well as applications increased substantially between 2019 and 2020, according to a report from the Consumer Financial Protection Bureau.
Analysis of data collected under Home Mortgage Disclosure Act requirements showed closed-end originations (excluding reverse mortgages) increased in 2020 by 65.2 percent, from 8.3 million in 2019 to 13.6 million in 2020. The higher numbers were driven largely by last year’s refinance boom, a continuation of a trend beginning in second quarter 2019.
While the number of financial institutions reporting 2020 HMDA data declined slightly compared to 2019, the number of closed-end records in 2020 increased compared to the previous year. There were 4,472 financial institutions which reported at least one closed-end record in 2020, down from 5,505 in the previous year.
The number of home-purchase loans secured by site-built, one-to-four-family properties increased by about 387,000, whereas the number of refinance loans increased by 149.1 percent from 3.4 million in 2019 to 8.4 million in 2020. The number of open-end line-of-credit originations (excluding reverse mortgages) in 2020 decreased by 16.6 percent, from 1.04 million in 2019 to 869,000 in 2020.
Despite those overall trends, the report noted differences in results across demographic groups. The share of loans secured by closed-end home-purchase loans for site-built, one-to-four-family, first lien, principal-residence properties for Black borrowers increased in 2020 and the share of refinance loans for Asian borrowers increased in 2020.
“Initial observations about the nation’s mortgage market in 2020 are welcome news, with improvements in the overall volume of home-purchase and refinance loans compared to 2019,” said CFPB Acting Director Dave Uejio. “Unfortunately, Black and Hispanic borrowers continued to have fewer loans, be more likely to be denied than non-Hispanic White and Asian borrowers, and pay higher median interest rates and total loan costs. It is clear from that data that our economic recovery from the COVID-19 pandemic won’t be robust if it remains uneven for mortgage borrowers of color.”
Because of the drastic changes in what HMDA data is collected in 2018 due to implementation of a 2015 rule, the report focuses on trends since that time. The 2015 rule stems from amendments made to HMDA by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.