The Consumer Financial Protection Bureau recently released a Home Mortgage Disclosure Act (HMDA) data report highlighting lending trends in the residential mortgage space. Total closed-end originations and applications increased significantly between 2019 and 2020.
Key findings:
– Closed-end originations (excluding reverse mortgages) increased in 2020 by 65.2% to 13.6 million.
– The increase was primarily driven by the refinance boom of 2020.
– While the number of financial institutions reporting 2020 HMDA data declined compared to 2019, the number of closed-end records in 2020 increased YoY.
– While mortgage activity generally increased, YoY, there have been continued significant differences between demographic groups, including higher interest rates and denials among Black and Hispanic consumers in the mortgage market.
The takeaway:
“Initial observations about the nation’s mortgage market in 2020 are welcome news, with improvements in the overall volume of home-purchase and refinance loans compared to 2019,” said CFPB Acting Director Dave Uejio. “Unfortunately, Black and Hispanic borrowers continued to have fewer loans, be more likely to be denied than non-Hispanic White and Asian borrowers, and pay higher median interest rates and total loan costs. It is clear from that data that our economic recovery from the COVID-19 pandemic won’t be robust if it remains uneven for mortgage borrowers of color.”
