The financial crisis of 2007 and 2008 sent the American housing market into a tailspin. New construction all but ground to a halt, and the market for existing homes was at its lowest point in recent history. As hundreds of thousands of families watched the equity in their homes slip away, the demand for new mortgages dropped to a staggeringly low number. It’s been a long slow struggle back, but the US economy is finally making a welcome recovery. New constructions are on the rise, the real estate market is on the rebound, and more and more consumers are applying for new mortgages. Proof of the recovery, if proof were needed, can be found in the annual mortgage statistics that are collated by both the government and other independent research firms.
The COVID-19 crisis of 2020 had a much more muted impact on real estate prices than the popping of the prior housing bubble as politicians and central bankers acted much faster and much more aggressively to counteract the economic slowdown. As a matter of fact, Fannie Mae predicted 2020 would be a record year for residential mortgage originations across the United States. They projected $54.1 trillion in total loan volume with around $2.7 trillion of that being refinance volume.
If you’re interested in the current state of the US mortgage market, you need look no further. We’ve gathered together some of the most telling mortgage statistics to give you a general overview of the American housing market.
The Size of the Residential Mortgage Market
The US mortgage market continues to feel the effects of the sub-prime mortgage crisis, but the numbers are on the rise. According to the Federal Reserve, outstanding mortgage debt for single family residences , but has been growing in fits and starts since 2013. Interestingly, outstanding mortgages for multifamily residences held steady, and even managed grow, despite the economic crisis. By contrast, non-residential mortgages have remained relatively steady, even showing some consistent growth over the same four year period.
Nearly a financial crisis the Federal Reserve started raising interest rates in earnest in 2017 2018. Increased rates caused the total residential mortgage production volume to fall nearly 7% between 2017 and 2018. The MBA estimated $1.64 trillion in production in 2018, while production stood at $1.76 trillion in 2017.
In Federal Reserve Chairman Jerome Powell stated rates were “a long way” from neutral. The stock market fell hard for the duration of the year, with the bottom happening on Christmas eve. In early 2019 the Federal Reserve changed their stated approach, announcing they did not expect to raise rates in 2019 were going to end the wind down of their balance sheet this year. Rates which rose throughout most of 2018 fell hard in early 2019, reinvigorating what was a stagnant refinance market.
The COVID-19 crisis created a title loans KS boom in home purchase loans and in mortgage refinances. Interest rates fell, causing refinance volume to jump to around $2.7 trillion while the total transaction volume for 2020 is anticipated to be around $4.1 trillion. Social unrest, lock downs, high urban living costs, and working from home from tight quarters made many city dwellers buy second larger homes in the suburbs or more remote areas.
Annual Mortgage Origination Estimates
Each year the Mortgage Bankers Association estimates the total production volume of 1 to 4 family unit residiential mortgages across the United States. Here is their annual mortgage origination volume estimate data from 1990 through 2019, with amounts listed in billions of Dollars.
How Profitable Are Mortgage Loans?
The Mortgage Bankers Association records quarterly data on how much independent mortgage companies and hom-loan subsidiaries of chartered banks make on loans. Due to heavy buying of mortgage-backed securities by the Federal Reserve and record loan volumes from falling interest rates loan originators made 203 basis points of the loan principal in the third quarter of 2020. Given an average loan size of $282,660 that equated to a profit of $5,535 per loan. This performance was significantly above the same quarter in the year prior, when lenders earned 73.8 basis points, or $1,924 of net income on each loan. The MBA sells a detailed production statistics report with stats going back to 2008. Since 2008 most quarters have seen a net production income of between 25 and 75 basis points.