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As most of us know, the mortgage market had a banner year in 2020. Interest rates bottomed out, applications surged, and lenders were busier (and sometimes stricter) than ever. But can you expect the same in 2021? Are rates still at record lows? If you're planning any new investments this year, you're probably wondering just that. These mortgage statistics can answer all your questions and more.
Mortgage rates are still very low
But they're slightly harder to come by
The latest Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers Association (MBA) shows lending standards have tightened ever so slightly, particularly on conventional loans. According to the data, the Conventional MCAI fell 2.8% in December 2020.
The latest originations report from ICE Mortgage Technology (formerly Ellie Mae) backs this up. The average FICO score across all closed loans in December was 751 -- up from 735 a year ago. Loan-to-value and debt-to-income ratios are also lower across the board.
More borrowers are using 15-year and conventional loans
Demand for 15-year mortgage loans is rising. Data from the Urban Institute shows 17% of all mortgage loans had 15-year terms in November. That's up from just 10% a year prior.
Conventional loan use has increased, too. The latest numbers from ICE show conventional loans accounting for 81% of all originations. That's a jump from 70% in December 2019.
Loans are taking longer to process
Likely due to high demand and lender backlogs, mortgage loans are taking longer to process and close than they were one year ago. According to ICE's data, it took an average of 58 days for all mortgage loans to close in December -- a whopping almost two-week difference over 2019.
Refinances tend to take longer than purchases, as do FHA and VA loans.
If you need forbearance, you're not alone
The CARES Act allowed millions of homeowners to hit pause on their mortgage payments last year, and many still remain on those plans today. According to MBA, as of mid-January 2021, about 5.37% of mortgage borrowers are currently in forbearance, amounting to about 2.7 million homeowners total.
Refis are still big
It's no secret there was a refinancing surge last year. And according to the latest data, it's going to continue. ICE's monthly origination report shows refinancing accounted for 60% of all closed loans in December -- and 68% of conventional loans.
The bottom line
It's shaping up to be a busy year for mortgage lenders, so make sure you're prepared before making that next investment. Brush up your credit, expect longer closing times, and do what you can to snag those bargain-basement rates before they're gone.
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