Mortgage originations for 2020 will surpass $4 trillion for the first time ever, according to a projection released today by Black Knight. Third-quarter originations are also likely to set new quarterly records.

In Black Knight’s latest Mortgage Monitor Report, released today, the company looked into rate-lock data – historically a reliable indicator of lending activity – and found that Q3 originations are likely to break quarterly records in purchase, refinance and total lending volumes. Black Knight Data & Analytics President Ben Graboske said market conditions suggested that originations could remain elevated in November and beyond.

“Rate-lock data from Black Knight’s Compass Analytics division shows that Q3 2020 mortgage originations are on track to break quarterly records across the board and remain strong moving into Q4,” Graboske said in a statement emailed to MPA. “This suggests that origination and prepayment activity will likely remain elevated well into Q4 2020. September lock activity held relatively level with August, but through October 19, lock activity overall is up 4% from the month prior – with purchase locks up 6% and refinance locks up 3% thus far. Interest rates setting new record lows in mid- and late October will likely continue to fuel lock activity in coming weeks.”

Graboske said that, assuming a 45-day lock-to-close period, not only should Q3 set quarterly records for origination volumes, but volume could remain at or near peak levels through November, and perhaps longer.

“Estimated origination volumes based on underlying locks suggest both Q3 refinance and total originations could be up 25% or more from Q2, while purchase lending could be up by 35% or more,” he said. “This would push 2020 purchase lending to the highest level since 2005, and both refinance lending and total origination volume to their highest levels ever. Indeed, total lending in 2020 is well on its way to easily eclipse the $4 trillion mark for the first time in history.”

The report also found that, despite COVID-19-related headwinds earlier in the year, home-price appreciation has remained robust in 2020. The annual home-price growth rate fell to 0% in May – the first time home prices remained flat year over year since early 2012. However, price-growth rates have since skyrocketed due to record-low interest rates, improved affordability and a severe inventory shortage. After posting annual home-price growth of 11.5% in August, annual appreciation spiked to 14.2% in September, the highest such growth rate in more than 15 years.