Home Loans to Reach $3.2 Trillion in 2020, Most in 17 Years

(Bloomberg) -- U.S. home loan originations are forecast to total $3.18 trillion this year, the most since 2003, as low rates fuel a continued surge in refinancing and purchases, according to the Mortgage Bankers Association.

Housing activity has soared since the onset of the Covid-19 pandemic, driven by record-low interest rates and a desire for more space to quarantine. While loan originations are expected to fall to about $2.49 trillion in 2021, that would still be the second highest level in 15 years, the trade association reported Wednesday from Washington.

“The economy, labor market, and housing market have all seen meaningful rebounds since the onset of the pandemic, but there is still profound uncertainty,” Chief Economist Mike Fratantoni said in a statement. Next year, “particularly the second half, should be a year of continued purchase growth and slowing refinance activity.”

Purchase originations are forecast to reach $1.54 trillion next year, eclipsing the previous record of $1.51 trillion set in 2005.

“As long as the spread of the pandemic is brought under control, the economy should expand around 3 percent next year, allowing the job market to improve, incomes to rise, and home sales to meaningfully increase,” said Fratantoni.

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