Mortgage Issuance Surges to $642 Billion In October
Mortgages are surging. According to Freddie Mac, the total combined volume of cash-out refi's and 2nd Mortgages/HELOC consolidation reached 59.2 Billion in Q3 2020. Now more than ever people are attempting to raise cash. This should come as no surprise as economic conditions have put a strain on many households' labor income. Also, the financial incentives are there to cash out some equity: households have locked-in home price appreciation and lower rates than on their existing mortgages. This is a double win.
Mortgage originations hit an all-time high in October with preliminary data suggesting $642 billion in issuance in October, and much of the new originations are financed in the Agency MBS market.
The median appreciation of properties that are being refinanced is north of 10%
But arguably, the most important reason is the interest rate savings. Households have to reduce their monthly liabilities in order to better match their reduced labor market incomes.
The median age of the existing mortgage at the time of refinancing has plummeted to about 3 years.