Refi accounted for almost half of Tri-Cities loan originations in 2020

Homeowners took advantage of basement-level mortgage rates and made 2020 the year for refinancing. Almost half of the Tri-Cities loan originations (45.5%) went to refinancing, according to ATTOM Data Solution’s Q4 Property Mortgage Origination Report.

Owners in the Johnson City Metropolitan Statistical Area (MSA) refinanced a total of 2,965 homes. That’s 7.5% of the mortgaged homes in Carter, Washington, and Unicoi counties. Economics was the driver for much of the refi spike in that area since Washington Co. and Johnson City – on average – have the highest-priced homes in the region.

Kingsport-Bristol MSA owners refinanced 3,456 homes accounting for 5% of the mortgaged homes in Hawkins and Washington counties in NE Tenn. and Scott and Washington counties in SW Va.

“Lenders continued working overtime across the United States in the fourth quarter or 2020, with increases in loans and dollar volumes rarely seen during a time of year when activity normally slows down. The rising numbers left another in a long string of markers showing how the housing market has mostly avoided economic damage stemming from the virus pandemic,” said Todd Teta, chief product officer at ATTOM. “As with other housing market measures, the appetite for loans among homeowners and home seekers in the coming months remains uncertain, depending on interest rates and multiple factors connected to the pandemic. But the fourth-quarter data shows continued strong demand for new mortgages, especially among homeowners looking to refinance.”

Several local lenders – like real estate brokerages – reported 2020 was their best-ever year. Due to the crush of loan applications, the closings target for home purchases were pushed back to a six-week window early in the year. It helped but didn’t solve the understaffing issues for some local lenders.

Much of the refinancing business went to online lenders.

Nationwide lenders refinanced 2.23 million homes in the fourth quarter, which was 12% more than in the third quarter and 71% above the Q4 2019 level.

The Q4 local numbers show Kingsport-Bristol refi’s 25.6% higher than the third quarter and 47.6% higher than last year.

Johnson City MSA refi’s were up 7.8% from Q3 and 65.9% from last year.

Home lending was also strong. It accounted for 38% of 2020’s loan originations. Year-over-year home loans were up 25.9% in the Johnson City MSA and 23.4% in Kingsport-Bristol when compared to Q4 2019.

Both MSAs cooled off during the last three months of the year. Lenders originated 585 loans in the Johnson City MSA and 816 in Kingsport-Bristol. The decrease was 17.1% lower than Q3 in the Johnson City MSA and down 12.4% in Kingsport-Bristol.

All-in-all it was a record-level year for lenders and the housing market. About a third of all residential resales were cash deals.

When interest rates began creeping up a couple of weeks ago, pundits began asking if that would cool the market off. So far, there’s no evidence of that.

The Northeast Tennessee Association of Realtors (NETAR) Home Sales Report listed 554 closings in February. It was the strongest February since the local association began its monthly reports.

The short-term outlook calls for a continuation of current conditions through mid-year. The lack of inventory and higher-mortgage rates nibbling away as consumers’ purchasing power is exerting additional upward pressure on prices. February’s average price was up 27% from last year. The average sale during the month was $46,454 more than the average last year.

Don Fenley is a seasoned Tri-Cities journalist specializing in housing, economic and demographic trends. The Times-News carries his reports on the Sunday Money Page. He is also a frequent contributor to Business Matters on WETS and the Business Journal of the Tri-Cities’ print and electronic editions. Detailed or specific reports are available by contacting him at djfenley@gmail.com.

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