Cyclical and secular factors are coming together to boost agency mortgage production. On the cyclical front, record low mortgage rates are the key driver of surging refi activity. Purchase activity is supported as well by low rates, but there are also indications that secular changes surrounding lifestyle choices sparked by the Covid-19 pandemic are leading homeowners to change residences away from the largest urban centers.
The sharp rise of mortgage deliveries is not necessarily matched by a corresponding rise in loan origination. As we pointed out back in May, banks are reducing the share of whole loans held on their portfolios, and this trend has accelerated recently, as indicated by the chart below:
Besides the record volumes there are also interesting issues of composition by agency, which will be addressed in a future post.