Refinance loans drove increase in 2020 closed-end originations

The total number of closed-end originations and applications increased substantially between 2019 and 2020, according to new HMDA data on residential mortgage lending trends.

A CFPB report released on Thursday states that closed-end originations (excluding reverse mortgages) increased in 2020 by 65.2%, from 8.3 million in 2019 to 13.6 million in 2020.

Most of the increase was driven by the refinance boom observed in 2020, and the data point notes that, while the number of financial institutions reporting 2020 HMDA data declined compared to 2019, the number of closed-end records in 2020 increased compared to the previous year.

While mortgage activity generally increased, year over year, significant differences between demographic groups persisted, including higher interest rates and denials among Black and Hispanic consumers in the mortgage market, according to the CFPB.

“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 Dave Uejio, CFPB acting director. “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.”

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