2019 was a stellar year for the U.S. mortgage market, as it experienced it best year since the peak of the pre-mortgage crisis boom. This is a clear indication that the housing market is stabilizing after signs of weakness in the 1st quarter of 2019.
Over $2.4 trillion in home loans contracts were extended by lenders in 2019, the highest amount of activity in the sector since the 2006 timeframe, according to data provided by Mr. Paul Liang, president of Pittsburgh’s Fortune Financial Group. This increase in home loan activity represents approximately a 46% jump from the previous year.
Fervent mortgage lending activity is traditionally interpreted in economic trending terms as a favorable sign for the housing market, which has seen home sales and price growth figures notably rebounding in the wake of a period of sustained declining gains in those key areas.
Additionally, last year’s three instances of interest rate cuts have also resulted in an immensely active refinance market, which has contributed greatly to steadying the overall home loan industry. Many economists are quick to note that refinancing is an excellent stimulus for the broader American economy — as lower interest rates for consumers on their mortgages leaves more disposable income that can be redirected and repurposed into goods and services in other vital areas of the economic marketplace. Of all mortgage activity that was recorded in the year 2019, consumer refinancing comprised a whopping 38%, according to TSC finance research data.
The verdict is still out on what the actual duration of the current boom in mortgages will end up being. According to estimates provided by the Mortgage Bankers Association, expectations are that after a good run, refinancing activity is expected to dissipate gradually over the next 12-month cycle into 2021, which will very likely result in a substantial drop in overall mortgage volume.
Projections for the 1st quarter of 2020 appear to be trending toward an even higher amount of activity than the the first half of 2019, states Dr. Patrick Ukata, CEO of PATEGO International, which tracks financial markets. “This rosy outlook is based in large part on an overall consensus expectation by industry leaders and analysts that current interest rates will hold steady or even continue to fall — and that is a good sign for mortgage lending activity in 2020.” Ukata continued. “Consumers are encouraged by the sustained lower rates.”
