Morning Report: Origination volume hits a record in the second quarter

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S&P futures336730.6
Oil (WTI)37.500.77
10 year government bond yield 0.68%
30 year fixed rate mortgage 2.93%

Stocks are rebounding today after a tech sell-off. Bonds and MBS are flat.

Mortgage applications increased 3% last week as purchases and refis rose by the same amount. Purchase applications were up 40% year-over-year, however there was some noise due to the Labor Day holiday last year.

Black Knight Financial reported that $1.1 trillion worth of mortgages were originated in the second quarter

“Despite the nation being under pandemic-related lockdowns for much of the quarter, a record-breaking surge in mortgage originations occurred in Q2 2020, driven by the record-low interest rate environment,” said Graboske. “Nearly $1.1 trillion in first lien mortgages were originated in Q2 2020, which is the largest quarterly origination volume we’ve seen since first reporting on the metric in January 2000. Refinance lending grew more than 60% from the previous quarter and more than 200% from the same time last year, accounting for nearly 70% of all Q2 originations by dollar value. At the same time, purchase lending declined 8% year-over-year as the traditional spring homebuying season was impacted by COVID-19-related restrictions. However, mortgage loan rate lock data – a leading indicator of lending activity – suggests that the homebuying season was simply pushed forward into the third quarter.

More than half of Redfin offers faced bidding wars in August, according to the company. Competition was most pronounced in San Diego and San Francisco, as well as Phoenix, Austin and Salt Lake City.

“The market is on fire. There just isn’t enough on the market to supply the huge demand for homes,” said San Diego Redfin agent Lisa Padilla. “A lot of military buyers are trying to take advantage of the low interest rates for VA loans. Anything on sale for less than $600,000 has multiple offers, and sometimes they’re getting more than 20 offers. Only condos are a little slow, as most buyers want a home with a yard.”

Forbearance numbers fell to 7.16% from 7.2% last week, which was the lowest level in nearly 5 months. 4.8% of Fan and Fred loans were in forbearance while FHA loans in forbearance rose slightly to 9.62%.


Author: Brent Nyitray

In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical

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