US home buying and refinancing boom boosted mortgage lending in 2020

New York

MORTGAGE lending in the US surged last year after the pandemic fuelled a housing boom driven by low interest rates and the shift to work from home, showed information released Thursday by the Federal Reserve.

The annual release of data under the Home Mortgage Disclosure Act also showed the share of home purchase loans given to Black borrowers rose last year and the share made to Hispanic and Asian borrowers declined slightly.

Mortgage originations increased by about 5.3 million in 2020 from 2019, a rise of 67.1 per cent.

Mortgage refinancing for properties that house one to four families soared by 150 per cent, while home purchase loans increased by 6.7 per cent.

Black borrowers received 7.3 per cent of home purchase loans in 2020, up from 7 per cent in 2019. The share of loans made to Hispanic-white borrowers decreased slightly to 9.1 per cent from 9.2 per cent, and those made to Asian borrowers decreased to 5.5 per cent from 5.7 per cent.

The share of home purchase loans made to low- or moderate-income borrowers increased to 30.4 per cent from 28.6 per cent.

The report is based on data provided by 4,475 banks, credit unions and other mortgage lenders.

The US housing market outperformed last year even as the broader economy was devastated by the Covid-19 pandemic, which led to widespread business shutdowns and left millions of Americans unemployed.

Demand for vacation homes was especially strong, driven largely by people who shifted to working remotely and virtual schooling.

However, rising home prices and a limited supply on the market are restraining growth, causing some forecasters to lower their projections for future home sales. REUTERS